The emergence of Bitcoin in 2009 was the beginning of an era, an undeniable era that many refused to acknowledge. Bitcoin, regarded as the first-generation blockchain, is a cutting-edge technology that was first developed with the sole aim of revolutionizing the industry. It did just that but like many firsts, it has limitations in technological capacity. For one, when Bitcoin launched, it could only do the most basic things: send and receive cryptocurrencies, etc. That was as far as the technical composition could allow. Another limitation of the blockchain is its inability to process a large number of transactions. It is currently able to handle 7 TPS.

The second-generation blockchain championed by Ethereum made a huge impact in the industry with the introduction of the first blockchain virtual machine, Ethereum Virtual Machine (EVM) which saw the inception of smart contracts - self-executing codes and decentralized apps that brought a whole new world of decentralized finance. With smart contracts, a lot has been accomplished and is still being done but Ethereum also has its limitations, the most notable of which is its inability to scale (process a large number of transactions). Ethereum processes around 12 - 15 transactions per second on average. Still not enough.

This inability to scale for both Bitcoin and Ethereum is because they both execute transactions serially or sequentially.

What is Sequential Execution?

Sequential or Serial Execution is a blockchain processing transactions linearly, one at a time. Transactions on Bitcoin, Ethereum, and other blockchains developed earlier implemented this mode of execution and it was optimal until 2020 when the industry had its summer break with the launch of the first blockchain to challenge the status quo by utilizing a different mode of execution - parallelization.

What is Parallel Execution?

Unlike serial execution, parallel execution (also known as parallelization) is a blockchain’s ability to process multiple transactions at a time. So instead of handling them one at a time, blockchains that implement parallelization process them as they come - in hundreds or thousands.

Blockchains built from here onwards are regarded as third-generation blockchains because they solve two eminent problems that other blockchains face: scalability and high transaction costs.

Multiple transactions can be processed simultaneously on the condition that they do not touch the same state. What this means is that the transactions must be independent of each other.

Source: Amber Research

Assuming Trader A wishes to send 20 SOL to Trader B, meanwhile, at the same time, Trader C wants to send 100 JUP to Trader D. Both SOL and JUP are Solana-based cryptocurrencies. On the basis that these transactions are not reliant on each other (the output of transaction X doesn’t affect the input of transaction Y), they can both be executed at the same time.

Two Methods of Parallel Execution

Deterministic Method: this approach involves a mechanism where a system has access to access to the blockchain state to determine which transactions are explicitly independent. Meaning, the independent state of transactions is first determined before execution occurs.

Optimistic Method: optimistic parallelization involves processing transactions in “good faith” that they’re all independent of each other (no output conflicts with any input). In cases where some of the transactions in fact overlap, they are re-verified and then re-executed serially.

The subsequent parts of this series will explore blockchains, both live and upcoming, that implement parallel execution. The series will be a study into Solana, Sui, Sei, Monad, Aptos, Fuel, and Shardeum approaches to parallel execution and the underlying mechanisms behind each of them.