The Blockchain technology is considered by most of its proponents as one of the most secure ways to store data, yet by modern standards, it remains one of the most inefficient for large volumes of data. Modern options for storing large volumes of data, like Google Drive and AWS, can effortlessly and cheaply store gigabytes of data; one megabyte of data storage on public blockchains like Ethereum can cost thousands of dollars. There are some misconceptions that this is a bug, but that is incorrect; this is, in fact, a result of a fundamental trade-off on decentralization in blockchains.
The Replication Problem
The main reason for the inefficiency of storing large amounts of data on blockchains is the massive redundancy. Unlike centralized systems, where data is stored on one or a few servers, due to the decentralized nature of blockchains, all data has to be sent and stored on every node in the system. This means a 1MB file saved on a blockchain with 10,000 nodes will effectively become 10GB aggregated across the entire network. This kind of complexity is called the O(n) storage complexity, meant to ensure data on the network is immutable and censorship-resistant, but it makes it exponentially more expensive to store new data on the blockchains.
Consensus and Verification
The other element of security provided by blockchains is tied to the consensus mechanism, where every data sent to a blockchain has to be verified and requires a consensus of nodes in the network to verify it. With large data, a notable burden is placed on the network that slows down the verification process and increases the hardware requirements for each node/. This has the potential effect of forcing smaller participants out and pushing the network towards centralization.
The Scalability Trilemma
The “Scalability Trilemma” is the principle that governs blockchain technology. It essentially states that a network can only prioritize two of three properties: security, decentralization, and scalability. This implies that to maintain the blockchain’s security and decentralization, a tradeoff is made that sacrifices scalability.
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