Ethereum has currently the ability to make 13 transfers per seconds. That is a really low capacity. So if Ethereum wants to replace visa and act as digital cash than it needs to scale up its capacity. So what is Ethereum Plasma?
The Problems of Ethereum
Before you understand what Ethereums problem is, you first need to understand what blockchain is. So when you submit a transaction, a miner verifies and then adds it to the blockchain. The blockchain is a series of blocks which are stored in every node around the globe. Each block contains a certain number of transactions and added to the blockchain. Also, a block can’t be changed. This whole process occurs whenever you want to use any crypto to transfer money to another person.
But for Ethereum there is only one blockchain. So for every transaction, the entire network of nodes must agree that the transaction is correct. Because of this, Ethereum can only transact 13 transactions per second. Especially if you consider that visa is currently processing 20.000 transactions per second. But we can solve these problems with Plasma.
What is Ethereum Plasma?
So what is Ethereum Plasma everyone is talking about? What if there are more then one blockchain for one currency. That could increase the capacity by a lot. And that is what Ethereum Plasma is trying to do. Instead of one central blockchain, they split it into two different child blockchain. These two child blockchains can communicate with the original blockchain. You can merge these child blockchains into one central chain. You could also split these two children so you would have a total of four different child blockchains. This would lead to a four times increase.
There is no limit to how many times you could split these chains. So we could replace Visa which currently does 20.000-40.000 transactions per second. So this is how Ethereum could have theoretically infinity scaling potential with Plasma.
If you want to learn more about Plasma, how it works and what the problems are, visit us.