Imagine this. What if every time you spent a dollar, you had to update everybody who buys and sells dollars? What if you had to contact every bank, every merchant, and every investor and let them know that you were spending this dollar with this serial number? If that sounds inefficient, it is. Yet, this is what happens every time an altcoin is bought, sold, or exchanged. Sharding promises to make it more efficient.
As you know, altcoins are built on blockchains. Blockchains are enormous distributed ledgers, where every node on a network gets updated on what happens with every coin in the network. When the network is small, this is simple. But altcoin networks are rarely small, and that can mean transactions crawl as millions of nodes crunch thousands of transactions. It can also create gaps where a transaction starts, but an unethical actor tries to sell the same coin twice, slipping through the gap between transaction and processing.
Sharding assigns random nodes to do this job, instead of the entire network. The idea is that smaller sets of nodes will crunch the data faster and that the random distribution means nobody is stuck doing all the work. There are some concerns about sharding as a technology, the most basic being whether an unethical actor can manipulate a shard and whether members of a shard should be compensated.
However, the value of sharding, speeding up networks and transactions, is attention-getting. With altcoins, every node works for the good of the whole, but sharding might mean the burden for everyone is a little less. To learn more about sharding and other terms used in the world of New Finance, subscribe to the Bitcoin Market Journal newsletter today!