Blockchain News

Blockchain or No Blockchain?

The advent of crypto currencies has generated an ever growing demand for growth and development of blockchain technology. This is because the technology behind it is ten years old and as is, it’s hopelessy unable to expand to accommade the potential millions of transactions that will be required in the future.

The problem lies in a design feature that limits the data storage size of the blocks in the chain. This limitation is designed to make for small data files of only One MB to make for faster transit time, but also to prevent a network overload.

Bitcoin was designed to facilitate Peer-to-peer transactions between individuals in the form of currency transfer. Therefore, the data files were expected to be small. But the design flexibility of the blockchain lends itself to a myriad of financial, medical, legal, industrial, and many other applications, putting an unsustainable demand on the system.

Also, the small size of the blocks would prevent hacking attacks like DDOS (distributed denial of service), or ‘Sybil”, which are designed to  overload a network.

Solutions to the scalability problem of the blockchain are presented through upgrades like SegWit (Segregated Wintess) protocol, or by using Graphene (Bloom and IBLT filters). But those are only improvements that increase the size to 2 or 8 MB; still too small for real world applications.

Another approach is to start over from scratch with a new blockchain or  bypassing the blockchain altogether using sidechains. The Ziliqa (ZIL) projects does both; it was designed new using ‘Sharding’, the partition and transportation of blocks through multiple parallel chains which then rejoin the chain at the end of the transaction.  Lisk (LSK), Raiden (RDN) blockchains uses sidechains or ‘Off the Chain’ transaction strands that work independently from the main chain and use private companies owned nodes to do the verification. This makes the blockchain decentralized but thousands of times faster. The IOTA blockchain use even more advanced systems like directed acyclic graphs DAG which are also decentralized.
In addition to scalability, future projects address the security of hash algorithms of the blockchains through ‘Ideal Lattice’ and quantum computing.  So given the fast pace of technology, the question is whether a blockchain is still viable or even necessary.  The answer lies in whether existing companies can afford to completely overhaul their entire networks, or invest in a new, untested type of blockchain which promises to deliver a true system for real world use.

Leave a Comment