Network Congestion On Blockchain: Control, Cause, And Impact On Network Transactions

JAKARTA - In this digital era, blockchain technology promises updates in the financial system. This revolutionary technology underlies crypto assets, NFT, and various decentralized applications (dApps) that offer alternatives to traditional financial systems. However, behind its sparkling and technological sophistication, there is a hidden threat that often haunts blockchain developers, namely network decisions or network densities.

Network consent can be likened to a simple way. Imagine blockchains such as highways and transactions such as vehicles passing on top of them. When the volume of the car increases, the highway can become congested and jammed. Apparently this condition also applies to the blockchain.

Network density occurs when there are more transactions that need to be processed than blockchain can handle. Transactions pile up in the mempool (memory pool), Mempool serves as a gateway to blockchain and is a temporary storage area for various transactions waiting to be validated and put into blocks, this is similar to long queues at toll gates.

Several factors that can cause blockchain network density include soaring transaction volume, scalability problems, and latency and network bandwidth. The following is further information regarding the causes of network congestion:

Surge In Transaction Volume

The more users join the network and make transactions, the higher the transactional burden on the network. This was clearly seen during the launch of the new project which attracted a lot of interest, such as Bitcoin Ordinary which burdened the Bitcoin network.

Constraints on scalability

Blockchain has a limit in terms of speed and number of transactions that can be processed. For example, Bitcoin is only able to handle 7 transactions per second due to block size restrictions.

Network Latency and Bandwidth

Delayed in deploying transactions between nodes and limited network bandwidth slows down the transaction validation process, exacerbating the density situation.

The density of blockchain networks has unpleasant consequences for users. They are forced to wait hours for days until their transactions are processed. Of course this causes discomfort among crypto users who usually buy digital assets using personal wallets on the decentralized exchange platform aka DEX (Decentralized Exchange).

Long Waiting Time

Transactions take a long time to process, can take hours or even days, frustration users and hinder economic activity.

High Transaction Fees

When the network is dense, users are forced to increase transaction costs so that their transactions are prioritized. This can burden users, especially for those who make small transactions.

Disturbed Availability

Blockchain can be jammed and cannot process transactions at all, preventing users from accessing decentralized dApps and financial services.

Security Risks Rise

Delayed transactions in the mempool are vulnerable to multiple expenditure attacks aka double spending, where criminals can manipulate transactions and deceive users.

In May 2022, Yuga Labs launched the highly anticipated digital land sale as part of their metaverse 'Otherside' initiative. Although the sale resulted in around $285 million (approximately IDR 4.1 trillion), it also caused some gas fees to soar as seen on the Ethereum network, with a total transaction fee of more than $176 million (approximately IDR 2.5 trillion).

Not only that, but the problem of network congestion was also experienced by Bitcoin and Ethereum in 2017. At that time, as demand for BTC increased, causing network density, network transaction costs also jumped to 50 US dollars.

That is a short understanding of Network Congestion or blockchain network density which has its own impact on crypto users. Even so, this is not without a solution. According to CoinMarketCap, the solution to the problem of network congestion is to take advantage of layer 2 protocols and break the network into the smallest part so that it can process transactions in parallel. This is considered to increase the flow of transactions more smoothly and not experience congestion again.