Second-layer protocols</strong></a> (such as sidechains and off-chain layers), which are built on top of the main chain, are used on <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-blockchain/">blockchains as scaling solutions. In addition, second-layer scaling solutions include <strong>state channels</strong>, blockchain interoperability, rollups, sharding, and alternative cryptographic functions.</p>\n<p><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-state-channel/">State channels</strong></strong></a> (or payment channels) allow several users to form a direct communication channel while sending <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-bitcoin-btc/">BTC, which increases the efficiency and production of a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-decentralized-network/">decentralized network</strong></a>. <strong>Lightning Network</strong>, Raiden Network, Trinity for Bitcoin, or Neo networks for <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-ethereum-eth/">Ethereum are examples of state channel implementations.</p>\n<p>Sidechains, on the other hand, use a different method by connecting two or more blockchain platforms, each with its own <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-consensus/">consensus mechanism</strong></a>. As a result, a blockchain's vulnerability cannot be transferred to another. <strong>Plasma</strong> for Ethereum and Liquid for Bitcoin are both examples of sidechains.</p>\n<p><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-interoperability/">Interoperability&nbsp;refers to the <strong>capacity to see and share data from several blockchains</strong>. It's advantageous since it allows you to trade assets across various blockchains without the use of a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-centralized-exchange-cex/">centralized, custodial exchange</strong></a>. Interoperability allows users to transact across different platforms, which helps blockchain growth.</p>\n<p>Rollups (particularly an <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-optimistic-rollup/">optimistic rollup</strong></a>) seem to be <strong>the most promising scaling solution for Ethereum</strong>. 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Specifically, the network's throughput. In essence, <strong>the scaling problem has a great impact on the speed and the costs of blockchain transactions.</strong></p>\n<p>It stems from the way that a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-decentralized-network/">decentralized network</strong></a> handles blocks of transactions that are tied to block sizes and time. It is time-consuming since it takes a significant amount of time to create a new block.</p>\n<p>This issue came to light when <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-bitcoin-btc/">Bitcoin users had to suffer through slow transfers and increased fees due to usage spikes.</p>\n<p>It&rsquo;s important to keep in mind that <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-block-size/">block size</strong></a> and frequency are limited. However, it&rsquo;s possible to expand it. 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It is named after the pseudonymous inventor of BTC <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/who-is-satoshi-nakamoto/">Satoshi Nakamoto</strong></a>. Satoshi (SATS) is also referred to as <strong>satoshis</strong> (the plural form), SAT, or even just S.</p>\n<p>It was proposed that a satoshi could be used to refer to one-hundredth of a BTC at first, but the crypto community eventually agreed that it should be used to refer to one hundred millionth of a BTC.</p>\n<p>It's <strong>essential</strong> for BTC to be so divisible. Since 0.10 BTC can be valued at millions of dollars, limiting it to only two decimal places would make <strong>BTC</strong>&nbsp;unsuitable for regular use. When it comes to paying <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-transaction-fee/">transaction fees</strong></a> and making <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-micropayment/">micropayments, smaller fractions are a necessity.</p>","level":"easy","meta_title":"What is Satoshi (SATS)? Definition & Meaning | Crypto Wiki","meta_description":"Satoshi (SATS) meaning: Satoshi (SATS) - Bitcoin’s smallest unit with the value of 0.00000001 BTC.","meta_keywords":null,"language":"en","created_at":"2022-03-28T13:00:11.000000Z","updated_at":"2022-05-13T14:32:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-satoshi-sats"},"currentChapter":"S","currentSection":"what-is-scaling-solution","chapterTitle":"S","readingLevel":"medium"},"url":"/crypto/learn/crypto-terms/what-is-scaling-solution","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0">
Handbook Cover Page
Crypto Terms: Letter S

What is Scaling Solution?

Scaling Solution MEANING:
Scaling Solution - a method to allow the expansion of a system.
Medium
2 minutes

Let's find out Scaling Solution meaning, definition in crypto, what is Scaling Solution, and all other detailed facts.

A scaling solution is a method for allowing an expansion of a system by increasing efficiency and output while minimizing the impact on present operations. 

Second-layer protocols (such as sidechains and off-chain layers), which are built on top of the main chain, are used on blockchains as scaling solutions. In addition, second-layer scaling solutions include state channels, blockchain interoperability, rollups, sharding, and alternative cryptographic functions.

State channels (or payment channels) allow several users to form a direct communication channel while sending BTC, which increases the efficiency and production of a decentralized network. Lightning Network, Raiden Network, Trinity for Bitcoin, or Neo networks for Ethereum are examples of state channel implementations.

Sidechains, on the other hand, use a different method by connecting two or more blockchain platforms, each with its own consensus mechanism. As a result, a blockchain's vulnerability cannot be transferred to another. Plasma for Ethereum and Liquid for Bitcoin are both examples of sidechains.

Interoperability refers to the capacity to see and share data from several blockchains. It's advantageous since it allows you to trade assets across various blockchains without the use of a centralized, custodial exchange. Interoperability allows users to transact across different platforms, which helps blockchain growth.

Rollups (particularly an optimistic rollup) seem to be the most promising scaling solution for Ethereum. An optimistic rollup is a sort of scaling solution that uses off-chain computation to record transactions in a trustworthy manner. A great example of an optimistic rollup is Optimism.

Though the ultimate scaling solution for Ethereum or other PoS blockchains would be sharding. It involves separating the network into different shards, each of which is assigned a particular task. This improves the network's efficiency and output because it raises the transaction load capacity.

Lastly, talking about alternative cryptographic systems, they help to minimize the number of transactional data recorded on a blockchain. This data includes multi-sigs, ring signatures, Schnorr or Threshold signatures, and so on.
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