On the scalability of the block chain
Bitcoin and Ethereum, are the most widely used baccani, at the moment the bulk of transactions. Today they are used for public investments, but if blackany will ever be useful for something other than investment, the necessary decisions that allow them to maintain performance with increasing bandwidth. Speculative price of $300+ billion is a big number for technologies that are not yet able to support transactions of arbitrary scale, but there is good news — there are different approaches trying to allow the block chain to support mass transactions.
The application a fun topic of conversation, but if that does not solve the problem of scalability, applications, in addition to the investment may not work well.
What’s the problem?
From a technical point of view, to create a centralized network that supports scalable transactions is a snap. Already did PayPal, Visa, MasterCard and many others. But to create a system on the blockchain, offering users the optimal combination of scalability, decentralization and security is difficult. Acne Buterin presented the trilemma scalability, according to which the blockchain system, in fact, may have only two of the following three properties:
- Decentralization: defined as the ability of the system to work scenario, when each participant has access to only O(c) resources, i.e., conventional laptop or a small VPS.
- Scalability: defined as the ability to process O(n) > O(c) transaction.
- Security: defined as protection from intruders, with up to O(n) resources.
Bitcoin and Ethereum were primarily created for the sake of decentralization and security, at the expense of scalability (Bitcoin support ~3 transactions per second, and the Ethereum — ~12). This proved to be an effective way of promotion system, but with the growth of the network begin to show limitations.
There are various new blackany donating decentralization or security and trying to roll out the network. It is unclear how effective will such an approach. But so far no one has found a combination of decentralization, scalability, and security required for a fully functioning large-scale cryptocurrency network.
How to create a network, generating large scale transactional demand and can this demand be supported?
There are several possible scenarios to solve the problem of scalability cryptocurrency network:
1) scalability Problem solve community with the largest network effect and the attention of developers (Bitcoin and Ethereum).
The most famous projects that aim to improve the scalability of Bitcoin and Ethereum, is a Lightning Network (Bitcoin), Plasma (Ethereum) and Casper (Ethereum). Lightning and Plasma – solution of the second level, allowing to conduct transactions outside of the blockchain with the subsequent calculation of the blockchain, while Casper is committed to implement sharding for scalability in the blockchain on a consensus level.
There are also less well-known projects dealing with developments at the second level of Ethereum (TrueBit, Raiden and Counterfactual) and peer-to-peer network level for all blockchains (bloXroute). It’s promising beginnings, despite the early stage of development.
The main scalability solution for Bitcoin and Ethereum
The above solutions aim to achieve scalability at different layers of the stack of the largest networks with the largest amount of attention from the keen community. Community BTC and ETH is now more likely to believe in the cryptocurrency of their networks and have a strong natural need for scalability.
They also over these has the strongest technical minds. In my opinion, the most likely scenario is that several solutions will allow Ethereum and Bitcoin to scale the blockchain and outside of it and Bitcoin and Everwin will be the main networks that will benefit the masses.
2) there will be new networks where scalability will be provided initially, and users will gravitate to them.
Blackany priority of scalability. There are a number of new blockchains with priority for scalability, employees, users, and developers as a more scalable payment networks (Bitcoin, Cash, Algorand) and platforms for decentralized applications (Cosmos, Dfinity, EOS, etc.). Maybe I missed some quality projects, but, for the most part, there are many low-quality projects, making loud statements about scalability and collecting through these statements large sums of money from unsophisticated investors. I am skeptical about most of them, but there are a couple of rough diamonds, led by teams with deep historical context and knowledge that has made concessions in terms of security or decentralization that can be justified.
Although these projects with priority for scalability, as a rule, not enough enthusiastic community of ordinary users with powerful, natural need to use these platforms for transactions, they created baccani, which, in fact, at the moment massturbate better than Bitcoin and Ethereum. If there are no solutions that will scale Bitcoin and Ethereum, before the demand for transactions to grow substantially, it is possible that users will move to these blackany new generation.
A new consensus design. There is another category of projects with priority for scalability, which appeared even before, but not as proven as the projects listed above. These projects seek to achieve consensus through mechanisms that lie outside of the concept of the blockchain (gossip protocols, directed acyclic graphs, etc.). These ideas defend such projects as Hashgraph and DAG Labs. I think it’s a worthy initiative, but still in the early stages and very speculative.
3) Cryptocurrency network will not be able to scale.
Despite my bullish views on the future of the block chain, I recognize that there is a small chance that they will not be able to scale to the transaction, either because no will was found necessary technology, or because the user demand will not grow to the extent that we hope.
What to expect?
I believe that, given the network effects and the attention given to Bitcoin and Ethereum as well as the level of teams working on scalability solutions for these networks, it is very likely that solutions for Bitcoin and Ethereum will make possible the massive use of these networks for transactions.
It is also possible (though less likely) that a critical mass of developers and users move on to the next generation network, initially supporting more bandwidth (Cosmos, Dfinity, EOS or anything else). If we see a significant growth in the demand for transaction (i.e. several applications like CryptoKitties) before you will get the best solutions for Bitcoin and Ethereum, this could happen.
It is also possible (but less likely) that the cryptocurrency network will not be able to scale. I believe that the probability is less than 5%, because the entire driving force and talent focused now on solving this problem. But that doesn’t necessarily mean that people EN masse will want to use a cryptocurrency network to the transaction and will have found the right combination of decentralization, security, and scalability. The industry still has work to do on both fronts.