The first revolution was made by Bitcoin, showing the whole world that it is possible to make a cryptocurrency, which is able to save value and serve as a payment. The second revolution was made by Ethereum, providing a simple opportunity to raise funds for crypto projects and a platform for its launch.
Now we are on the verge of several new revolutions in the blockchain (IoT, Smart Economy etc.), but I would like to focus on one of the aspects related to solving the problems that Bitcoin and Ethereum face: the problem of transaction delay.
This article is unlikely to be useful for those who have long been following the market of cryptocurrency, but may be of interest to those who begin to learn about this world.
To describe this problem, I use the metaphor of a train.
Blockchain as a train
Let’s imagine that a blockchain is a railway, cryptocurrency is a train, each block is a route that a train does, every transaction is railway carriage, a value of transaction is a commodity. One of the key problems today is that the train does not always have time to quickly transport the goods.
Bitcoin is the very first locomotive. It is not very modern, but the most reliable. Every new trip is more complex for him than the previous one. There are sometimes so many wagons that senders have to wait several hours.
Ethereum is a fast and powerful train, but it has its own problem. Wagons in the Bitcoin train are filled only one homogeneous good (let it be gold), then Ethereum carries very different goods: coal, oil, timber, cars, animals (cats!), etc. Number of products increases and even such a modern and fast train as Ethereum begins to arrive with delays.
What to do? Answer in the same paradigm.
Currently, the industry has one mainstream answer to this question, which is given in different variations. Some believe that it is necessary to hook more wagons to each train, others that the train should go faster.
Most successful hardfork of of Bitcoin (Bitcoin Cash) was connected with the issue of increasing the number of railway carriages. There are new projects (EOS, NEO, QTUM, Tezos, Aethernity etc.) that offer an even faster train (they have other advantages, but the main idea is the best train) for “Ethereum tasks”. Or even faster train for the transportation of “precious metals” (Litecoin, Dash, etc.).
However, a real revolution is probably not a faster train. The Ethereum capacity seemed sufficient at the beginning, but the needs are becoming more complex. The transfer of “cryptocats” is not an easy task. And if we need to transfer even more complex information — videos or games? Even the most powerful and fastest trains can eventually face the same problem.
A solution that is different from the mainstream is the laying of additional railroad tracks (“sidechains”). Let each train carry only a certain type of goods and move on its own track, in this case there will be no problems with slow transactions.
The difference from the creation of a fundamentally new blockchain will be that the new railway track is built according to the same standards as the main one and will be immediately connected with it. The exchange between the main road and the auxiliary ones will be very quick and easy.
Unlike the real world, where road construction can be a very long process, in blockchain this task can be simplified and speeded up. The creation of its own blockchain in 2018 will be as simple as creating a website through a constructor, and in 2019–2020 it will not be more difficult than registering an account in social networks.
But what about the other independent railways?
The exchange of goods between trains remains a challenge. This is done by independent “warehouses” (centralized exchanges). You need to bring your goods to them and make an exchange there. This takes time. You carry the risks.
There are several ways to simplify this process. Some roads allow direct exchange (Atomic Swops). Some projects offer direct exchange of goods on the same train (for example, 0x). Decentralized exchanges allow you to exchange individual goods between trains directly, without warehouses.
But that’s not all! Exchange is just one of the operations that can be done. How to be with the unique features of various blockсhains? Is it possible to connect them?
ARK proposes to solve this problem, offering the technology called “SmartBridge”. It creates road junctions between different railways.
When you order something with delivery from another country, you absolutely do not care how the goods will reach you, how many intermediaries among you, how your payment in dollars is converted into yuan or yen for payment of labor of workers who produced goods, etc.
Blochchain will work similarly. You sign a contract for the purchase of the service, paying it with currency A, and get this service. But the actual transaction (invisible for customer) may look like the transfer of part of A to B to pay for the transport company, in C to pay the transaction fee in the blockchain to which the service belongs, in D to pay a consultant. Part of A is translated, for example, into dollars to pay taxes. Some part of A will return as a cashback at the end of the month.
All blockchain projects will become part of one system, which will seem for user to be a one whole (like an Internet).
The future is not for the fastest trains, but for the network of railways.
The author has not received any payment for this article. The author has some investments in projects mentioned in this article. This article is not an investment advice.
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