Explained: What is sharding and its role in blockchains

cnbctv18.com:

Why do blockchains need sharding?The Bitcoin and Ethereum blockchains, the firsts in the world, currently deploy the Proof-of-Work (PoW) consensus mechanism in their modus operandi. This entails the dedication of tremendous computing power towards the decryption of transaction data which involves complex mathematical computations.Each one of these powerful computing systems on the network is called a node, and the globally scattered nature of their network is what provides the necessary decentralisation to the blockchains.They also run the necessary security protocols required by the blockchain.

The greater the number of nodes, the greater is the decentralisation and hence greater is the security. However, the addition of too many nodes clogs the blockchain network and thus slows down the processing.

Blockchains have been facing this classic ‘trilemma’ of simultaneously achieving scalability, security, and decentralisation since their inception.So, if we need more nodes whilst decongesting the blockchain network, what do we do about the reduced processing speed? Here’s where sharding comes in.What is sharding?The philosophy behind ‘sharding’ is the horizontal spread of processing power instead of continuously adding it to one blockchain. But before the blockchain is scaled, we must reduce the amount of computing power required from each node to sustain operations.

Therefore, newer blockchains (including Ethereum) are moving to the greener and energy-efficient Proof-of-Stake (Pos) consensus mechanism.Unlike the PoW system, PoS only requires nodes to devote the blockchain’s native cryptocurrency to the network – a concept known as ‘staking’. The blockchain identifies these stakes as contributors and makes them transaction