Blockchain Scalability: Data Engineering Solutions for Future-Proof Systems

Abstract

Blockchain technology has undergone significant evolution, transitioning through various stages from Blockchain 1.0 to the current developments aimed at version 5.0. Initially popularized by Bitcoin in 2009, Blockchain 1.0 introduced the concept of a decentralized digital currency, utilizing distributed ledger technology to facilitate transactions without a trusted intermediary. Despite its transformative impact on financial systems and organizational operations, including government and banking sectors, Blockchain 1.0 faces challenges such as high costs, long waiting times, and scalability issues. This research delves into the critical aspects of blockchain scalability, examining on-chain and off-chain solutions to enhance transaction throughput and efficiency. We explore various scalability solutions, including block size adjustments and block compression techniques, while also addressing the security and privacy concerns that arise in blockchain applications across diverse sectors like the Internet of Things (IoT) and healthcare. By analyzing existing literature and proposing future directions, this study aims to contribute to the ongoing discourse on improving blockchain systems to meet the growing demands of modern applications. Ultimately, our findings underscore the importance of innovative data engineering solutions in creating future-proof blockchain systems that can effectively handle increased transaction volumes while maintaining security and privacy.