Understanding Blockchain Network Congestion: Causes and Solutions

Blockchain network congestion takes place when the transfer volume surpasses the network capacity, leading to procrastinated transaction processing. This article aims to provide the details of network congestion in the blockchains, their causes as well as the possible solutions.

What Is Blockchain Network Congestion?

When the transactions increase in number in comparison with the blockchain network’s capacity for transaction processing, it leads to blockchain network congestion. Several factors contribute to the respective phenomenon. They include external aspects like market volatility as well as inherent network characteristics like block time and block size. To comprehend the blockchain network congestion, one needs to understand the operations of blockchain technology.

Working of the Blockchain Technology

A blockchain contains a chain of several blocks with each of them consisting of transaction data developed by consumers. Every block incorporated into the chain is immutable and permanent. The blockchain network propagates these blocks across a decentralized node network. Each of these blocks stores a copy of the respective blockchain. The blockchain maintains security by implementing cryptography and serves as the backbone of Ethereum, Bitcoin, and other such crypto assets.

Some key concepts are contributing to the blockchain network’s capability for transaction processing. They take into account mempools, finality, candidate blocks, along with the longest chain principle. A memory pool or mempool denotes a group of unconfirmed transfers waiting for their addition to the next block. Candidate blocks or proposed blocks are proposed by validators and miners for inclusion in the blockchain. They contain unconfirmed transfers that have already been broadcasted but have not seen their blockchain inclusion.

Finality occurs when someone cannot reverse or change an operation or transaction. After reaching finality, a transaction gets permanently recorded on that blockchain without any provision of removal or alteration. In addition to this, the ‘longest chain’ principle denotes the rule that a valid blockchain version contains the majority of the computational load invested. It is usually the one comprising the largest chains of blocks. Thus, the shorter chain-based valid blocks, also known as stale or orphan blocks, get discarded. Additionally, their transfers return to the mempool.

What Leads to Blockchain Network Congestion?

There are many reasons behind the blockchain network congestion. The notable causes of the blockchain network congestion are discussed below.

Increased Demand

As a great number of people add transfers to the blockchain, the unconfirmed transfers increase in number in the mempool. They can surpass what can be added to a single block. The respective aspect is specifically relevant concerning the blockchains that have inherent limitations regarding block time and block size. More transfers can be a result of abrupt price volatility. This leads to a spike in transfer operations or big adoption cycles.

Decreased Block Size

The block size defines a blockchain’s possible peak size of a block. The respective size restricts the number of transfers a block can add. Hence, if the transactions exceed the limit of a small-sized block, it leads to blockchain network congestion.

Sluggish Block Times

How often an exclusive block is included in a blockchain is known as block time as Bitcoin includes a block every ten minutes. However, if transfers are being rapidly created in terms of volume and rate, a transaction backlog will occur.

Keeping all these factors in view, blockchain network congestion can pave the way for significant consequences.

The Effects of Blockchain Network Congestion

Due to blockchain network congestion, many negative consequences can take place, obstructing a network’s capability to operate smoothly.

Heightened Transaction Fees

A blockchain network incentivizes miners to prioritize transfers recompensing higher fees. Therefore, amid the blockchain net congestion, consumers often require submitting higher fees for transactions to get priority among miners. This can lead to the requirement of more funds for block usage, especially for smaller transfers.

Lengthy Transaction Confirmation Durations

Blockchain network congestion can also increase the waiting durations for transfer finality and confirmation.

Poor Consumer Experience

Increased fees along with slow confirmation durations can pave the way for a poor consumer experience. This can likely reduce the usability and adoption of a blockchain.

Market Volatility

The overall market volatility and uncertainty can also rise due to blockchain network congestion. When several users attempt to sell their cryptocurrency, the congested network could lead users to panic. Hence, they may resort to quickly offloading their crypto holdings.

Solutions to Prevent Blockchain Network Congestion

It is complicated to address blockchain network congestion. Nonetheless, users can take several approaches that have benefits and drawbacks.

Expanding Block Size

By enlarging the block size, a blockchain can process more transfers per block, efficiently expanding its throughput. However, bigger blocks take more time for their propagation. This spikes the risk of provisional forks. They additionally need additional storage space, potentially leading to amplified centralization.

Minimizing Block Time

A blockchain network can rapidly process transfers by minimizing its block time. Nevertheless, the decreased block times may raise the amount of orphaned blocks. This can probably compromise the security of the blockchain.

Sharding

Another possible solution to blockchain network congestion is sharding. It is a technique that splits a blockchain into many smaller shards. Each of them can process smart contracts and transactions. This can substantially raise the capacity of a network. However, analogous to L2 solutions, sharding heightens the complexity along with possibly posing more security risks.

Conclusion

While blockchain technology is witnessing a significant adoption, the issues dealing with network congestion are getting more attention. A network’s capability to effectively process the high transaction volume is crucial for broader usability and adoption. The blockchain community is continuously developing solutions to assist minimize such issues.