The founder of Ethereum Vitalik Buterin has explained in a recent “Ask Me Anything” session that the ETH network will eventually process 1 million transactions per second, and possibly even 100 million.

Scalability woes of Blockchain networks

At several conferences and presentations, Buterin emphasised that the ETH blockchain protocol and blockchain networks more broadly were struggling to deal with issues of scalability.

In September 2017, during an interview with venture capital investor Naval Ravikant at a TechCrunch conference, Buterin explained that bitcoin and Ethereum have been processing three to six transactions per second at peak capacity. He went on to say that for blockchain to support large-scale payment networks similar to Visa, stock markets like Nasdaq, and Internet of Things (IoT) networks, it will have to process hundreds of thousands of transactions per second.

He said: “Bitcoin is currently processing a bit less than three transactions per second and if it goes close to four, it is already at peak capacity. Ethereum has been doing five per second and if it goes above six, then it is also at peak capacity. On the other hand, Uber on average does 12 rides per second, PayPal several hundred, Visa several thousand, major stock exchanges tens of thousands, and in IoT, you’re talking hundreds of thousands per second.”

In the OmiseGO AMA conference, Buterin said that second-layer scaling solutions – which are subsidiary protocols built into the main client - that are currently being verified on the Ethereum testnet network could enable the Ethereum blockchain network to support large-scale decentralized applications with millions of users by taking a nuanced approach towards blockchain optimisation.

More specifically, sharding – which is the horizontal partitioning of data - splits a blockchain network to shards which are then equipped with a group of nodes that are set to process information of certain shards. When sharding is enabled in the network, nodes on the blockchain do not have to process every single bit of data, which brings down processing times and optimises the settling of information.

Plasma, a solution developed by Buterin and Lightning Network co-author Joseph Poon, functions similarly to Bitcoin’s Lightning Network, as it enables Ethereum to process micropayments by creating secondary networks within the main network to process information more swiftly, leveraging the security of the main Ethereum protocol and in so doing precluding the project from being vulnerable to possible attacks.

“The reason I think layer 1 and layer 2 [networks] are complementary is because ultimately, if you look at the math, the scalability gains from the layer 1 improvements and layer 2 improvements do ultimately multiply with each other. If you have a Sharding solution, the Sharding solution itself might increase the scalability of Ethereum by a factor of 100, or eventually even more. But then, if you do Plasma on top of the scalability solution, then what that means is, you’re not just doing 100 times of the amount of activity but you are doing 100 times the amount of entrances, the amount of exits, and despite resolutions,” explained Buterin.

1 Million TPS

Buterin further added that the synergy between first and second layer solutions would increase the scalability of Ethereum by 10,000x, allowing the network to process millions of transactions per second and supporting most applications.

“So if you get a 100x from Sharding and a 100x from Plasma, those two basically give you a 10,000x scalability gain, which basically means blockchains will be powerful enough to handle most applications most people are trying to do with them,” Buterin added.