Do you know what sharding in crypto means?

Why sharding is important to understand in crypto

Sharding is a key element in storing and accessing big amounts of data. Sharding can potentially add a lot of benefits to a crypto platform.

It helps the crypto platforms in more efficiently store and manage different types of data. It can lower transaction fees, use of resources and ultimately energy.

Sharding can also help increase security, decentralization, and scalability.

Sharding can also help increase security, decentralization and scalability.

What is crypto sharding?

Sharding is a method of storing data. Here is a simplified explanation to, what crypto sharding is. You can think of the data as sheets of paper. Imagine a large stack of papers placed on a table in front of you. This stack represents a blockchain. Say that you want to lookup something, it could be things like “Who owns this NFT?” or “How many bitcoins are in this wallet?”. You would have to start searching the paper from the top and then go all the way through the stack.

With crypto sharding you split the pile of papers into multiple stacks. Each stack is a shard. You might decide to make a pile with everything related to NFTs, a pile with everything related to transactions and one with all the smart contracts. Now if you need to search for something obviously it is quicker. But there are a lot of other added benefits as well.

Crypto sharding benefits

Sharding benefits will be explain continuing the paper sheets analogy from above.

Storage through sharding: When you split up the sheets of paper into multiple piles, you will have an easier time storing the papers in an optimal way. Say that some of the papers contain images, these needs to be stored in a dark and dry container. This is over simplified, but the same concept goes for data.

Security through sharding: Sharding does not automatically provide security, but it can if done right. The general concern is that when you split your pile of paper into multiple stacks, it becomes easier to corrupt one of the stacks. Here corrupt means to add a piece of paper with incorrect information, duplicate information or similar.

Do you know what sharding in crypto means?

If you end up having enough papers in one stack (a shard) with wrong information, then you can build your own truth and challenge the other stacks. However, there are different ways to tackle this. Every time a paper is being submitted to a stack, a group of people validates that the information is correct. Ethereum approach is to mix those people every time, so it becomes random who validates what. Again, this is simplified, but the idea holds.

Scalability through sharding: In crypto the blockchain will grow. You can compare this to people walking by and adding sheets of paper to your pile. If a lot of people want to add sheets there might be a queue. By having multiple piles, you can split up that queue. This makes the blockchain faster and allows for more people to use the blockchain, hence increases scalability. In the same way a lot of people would like to read the data on the blockchain. This is done by copying the sheets of paper. Now instead of copying the whole pile, the person can choose which stacks to copy. As of 7 OCT 2021, the complete bitcoin blockchain was approximately 360 Gigabytes of data. It does not only take a long time to copy the whole blockchain, it also requires more storage and internet data than many people have.

Validation and fees. Most crypto blockchains work in a way, where miners or validators are paid a small fee to add the sheet of paper to the pile (red. submit data to the blockchain). Time is money and if you are willing to pay a high fee, your request will be processed first. By sharding the blockchain you make the queue shorter and help these miners or validators submit more papers to the pile in the same amount of time. This reduces the competition and therefor the fees.

Decentralization through sharding. As mentioned under scalability, sharding will make the data piles smaller. This allows for more people to actually make a copy of the data, which help with decentralization. 

Is crypto sharding different from layer 2?

In general, yes. Sharding is a way to store data differently on layer 1. Layer 2 is normally used to talk about handling transactions outside of the main blockchain. A typical example is third party solution that runs on top of the main blockchain. Polygon is an example of a sidechain that integrations to the main blockchain Ethereum.

Do all crypto projects use sharding?

No, not at all. Even those crypto projects that use sharding often uses it in different ways. Bitcoin (BTC) for instance does not use sharding, but Ethereum (ETH), Cardano (ADA) and Polkadot (DOT) all do.

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