Scalability is a critical issue that needs to be addressed before blockchain distributed ledger technology can attain adoption by financial technology companies and compete with payment networks that process transactions many times faster.
In a blockchain, transaction validation is much slower than block construction, hence the idea of increasing the number of transaction validator nodes is a key to scalability.
Sharding is one of several technologies being explored to increase transactional throughput.
Simply stated, sharding is a way of spreading out the computational and storage workload across a peer-to-peer network so that each node isn’t responsible for processing the entire network’s transactional load. Instead, each node only maintains information related to its partition, or shard.
The data contained in a shard can still be shared among other nodes, which keeps the ledger decentralized and secure because everyone can still see all the ledger entries. However, the individual nodes do not process and store all the information.
Since sharding mechanisms are still in the development-and-testing phase, much work needs to be done to create standardized methods that address not only scalability but security. That challenge must be resolved before sharding can be considered a solution.