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January 15, 2018, 07:54:45 PM |
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One of the technical barriers include:
Limited scalability
As developers, I believe it’s critical that we shift some of our focus away from shiny new ICOs to the real technological challenges standing in our way.
All public blockchain consensus protocols have a challenging limitation: every fully participating node in the network must process every transaction.
Why? Well, recall that blockchains are fundamentally “decentralized” — which means that no central party is responsible for securing and maintaining the system. Instead, every single node on the network is responsible for securing the system by processing every transaction and maintaining a copy of the entire state.
While a decentralization consensus mechanism offers us the core benefits of blockchain that we all care about — security guarantees, political neutrality, censorship resistance, etc. — it comes at the cost of scalability, since decentralization by definition limits the number of transactions the blockchain can process to the limitations of a single fully participating node in the network.
Two practical implications here:
Low throughput: Blockchains can only process a limited number of transactions
Slow transaction times: The time required to process a block of transactions is slow. For example, Bitcoin block times are 10 minutes, while Ethereum block times are around 14 seconds. These times are even longer during peak moments. Compare that to the nearly instantaneous confirmations you get when using services like Square or Visa.
As a result, public blockchains are forced to make a tradeoff between low transaction throughput and high degree of centralization.
In other words, as the size of the blockchain grows, the requirements for storage, bandwidth, and compute power required by fully participating nodes in the network also increase. At some point, it becomes unwieldy enough that it’s only feasible for the few nodes that can afford the resources to process blocks — leading to the risk of centralization.
At that point, we’ve made a full 360-degree turn and gotten back to a centralized system that requires trust in a few big players, whereas what we want is a system that handles thousands of transactions per second with the same levels of decentralization that cryptocurrency originally promised to offer.
Scalability Solutions
Ideally, we want a blockchain design that has similar or better security properties to Bitcoin and Ethereum, while being able to function without every single node having to process more than a certain percentage of the total transactions in the network. In other words, we need a mechanism to limit the number of nodes that need to validate each transaction, without losing the network’s trust that each transaction is valid and authentic. It might sound simple in words, but is technologically very difficult.
Scalability is a large roadblock to the future success of the platform. There are a few proposed solutions that are currently being worked on by various development teams in the ecosystem. I’ve written about this topic extensively in a previous post, which I recommend you read if you’re interested. For a brief summary of some of the current solutions, see below:
Off-chain payment channels
The idea behind a micropayment channel network is to keep most transactions off the blockchain. It’s essentially a mechanism by which blockchain interactions that would normally occur on the blockchain instead are conducted off of the blockchain. The blockchain is used purely as a settlement layer to process the final transaction of a series of interactions for the final settlement, which helps lifts the burden from the underlying blockchain.
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