Scalability of the Bitcoin and Nano protocols: a comparative analysis

Sammanfattning: In the past year cryptocurrencies have gained a lot of attention because of the increase in price. This attention has increased the number of people trading and investing in different cryptocurrencies which has lead to an increased number of transactions flowing through the different networks. This has revealed scalability issues in some of them, especially in the most popular cryptocurrency, Bitcoin. Many people are working on solutions to this problem. One proposed solution replaces the blockchain with a DAG structure. In this report the scalability of Bitcoin’s protocol will be compared to the scalability of the protocol used in the newer cryptocurrency, Nano. The comparison is conducted in terms of throughput and latency. To perform this comparison, an experiment was conducted where tests were run with an increasing number of nodes and each test sent different number of transactions per second from every node. Our results show that Nano’s protocol scales better regarding both throughput and latency, and we argue that the reason for this is that the Bitcoin protocol uses a blockchain as a global data-structure unlike Nano that uses a block-lattice structure where each node has their own local blockchain.