Fixing Blockchain’s aura of invincibility
July 27, 2020 – if there was something Bitcoin should be thankful for, it is Blockchain technology, that without which, Bitcoin can’t exist.
But without Bitcoin, the blockchain technology may have taken the proof of concept to a longer, arduous route.
Through its maiden existence, blockchain has so far met critical challenges toe to toe and is heads high triumphant given the success it brought to the world of finance by its transparent, permissionless, borderless, tamper-resistant protocols. Beyond the financial walls, the blockchain technology is now wreaking havoc into legacy institutions, companies, businesses, and industries to such extent that some chinks in the armor are beginning to show.
Of Battle Tests and Bottlenecks.
While Bitcoin and other cryptocurrencies with their underlying blockchain infrastructure were practically designed for choice users, that is, private, on a manageable level only, its breakthrough usability demanded an upgrade that got creators, developers, and experts laying down a host of proposals and solutions to keep blockchain from stopping short of widespread public adoption. While growing an unprecedented number of users, the problem of scalability arose. Bitcoin traders have to wait within a 10-minute window before a transaction is verified. When Visa’s transaction network can process 1667 per second, and PayPal, 193, the TPS (transaction per second) of Bitcoin’s 7 TPS and Ethereum’s 20 TPS can turn purple pale in comparison. It can really create a bottleneck as the amount of workload intensifies. Bitcoin currently has 50 million wallet users, while Ethereum, as of June 2020 averages 463,000 daily transactions worldwide. Their popularity adds up to the volume of transactions that create bottlenecks- 1mb per block for Bitcoin, and 6.7 million gas limit per block for Ethereum.
Of Proposals and Solutions.
Time is of the essence when it comes to transacting business with these cryptos, given the scalability of the blockchain.
To understand further, we need to take into account the amount of time we register a transaction on the block, and the time required to reach a consensus.
Interestingly, there are several solutions and proposals submitted to address the issue of scalability in the blockchain sphere. For one is the Lightning Network, which comprises another layer laid over the leading blockchain network to allow for faster transaction processing.
Sharding is a method of horizontal niching by grouping subsets of nodes into shards or smaller networks that attends to transactions specifically identified according to their shard. It can scale up the proof-of-stake consensus mechanism. Blockchain’s Linear order is being converted to directed acrylic graphs or DAGS based chains. There are a host of other proposals that remains to be tried and tested such as Segregated Witness or SegWit, Block Size Increase, Proof of Stake, Off-Chain State Channels, and Plasma, each of which are being discussed with entailing pros and cons contributory to stalled developments.
The issue of scalability is still one of the more important problems blockchain has to face to this date. As many proposals and solutions are cropping up with the same intended purpose, these theories are not yet the once-and-for-all formula that we want to see happen to the mainstream-bound blockchain technology that is increasingly becoming a necessity to a digitized world.
But coming to think of it, the proposals mentioned above were brought to address mostly the issue of the border to border transactions that keep crowding its space. While that is happening in the financial ecosystem, let us not forget that blockchain is already wielding unlimited power in efficiency and streamline operations in localized scenarios of politics, healthcare, military, supply chain monitoring, digital IDs, data sharing, copyright and royalty protection, real estate, land, and auto title transfers, records backups, management of the Internet of Things networks, and a whole lot more coverage of our everyday living we can think of.
If that be the case, then it is only a matter of time that a scalable universal blockchain system will finally emerge.