Blockchain Technological Bottlenecks and Solutions
Scalability, Privacy, and Interoperability of Blockchain- A research by Huobi Pro
Huobi Academy of Blockchain Application has recently published its H1 2018 Global Blockchain Industry Overview and Prospects report which highlights impressive developments in the field of the blockchain. A Huobi Pro’s research wing, the Academy has provided a sneak peak of the report and I will be giving an in-depth analysis of the section of the report which focuses on Scalability, Privacy, and Interoperability of Blockchain.
This article focuses on the Blockchain technological bottlenecks and solutions which include Blockchain scaling solution progress, Privacy solution developments, and Interoperability issue solution developments. The full report can be accessed at the blockchain festival in Vietnam but before that let us have a look at the highlights:
- Blockchain scaling solution progress
One of the most critical issues in the blockchain space is the scalability problem. Two keys to the large-scale commercial application of blockchain are throughput and latency. At the moment, VISA can process 24,000 transactions per second while most of the blockchain networks can process only dozens of transactions per second. Confirmation transaction time for VISA is almost instant while for Bitcoin it takes about 10 minutes. Currently, scaling solutions are based on consensus mechanisms and transaction verification mechanisms:
- Consensus mechanisms
Traditional Proof-of-Work consensus is inefficient and wastes energy thus Proof-of-Stake, Delegated Proof-of-Stake and Practical Byzantine Fault Tolerant have gradually developed and been adopted to resolve scalability issues.
- Transaction verification mechanisms
Several scalable solutions for transaction verification mechanism include side-chain or state-channel, sharding, sub-chain, or layered structure.
2. Privacy solution developments
All the transactions under a public blockchain network are open and transparent which could be a threat to user privacy. Even though transactions are marked by the hashes of public keys, the user identity can be traced from the IP addresses, transaction records, block information, etc. Some of the solutions to privacy threat include Ring Signature, Zero-Knowledge Proof, CoinJoin and Invisible Internet Project.
However, areas such as smart contracts, data storage, communication, etc still remain unexplored in terms of providing privacy solutions. In 2018, blockchain industry encountered major developments in the above-mentioned areas and some of the networks providing privacy solutions include: Mainframe, dedicated to realizing peer-to-peer encrypted communication, Nucypher which focuses on providing distributed proxy encryption and decryption services, and Keep Network that strives to become the privacy layer for public blockchain and offer encrypted computations.
3. Interoperability issue solution developments
The three types of blockchain network include private, public and consortium blockchain. Various cross-chain technologies are emerging to address issues such as asset transfer between different private and consortium blockchain, transaction throughput, scalability, privacy considerations, communication and interaction issues with public blockchain. Cross-chain interoperability is difficult and costly but a lot of research and development is taking place and major cross-chain schemes include:
- Notary schemes
Ripple is a typical example whose Interledger Protocol is able to connect different ledgers and lets users transmit currencies freely by using third-party connectors or validators.
- Relay Technology
Cosmos and Polkadot are typical representatives. Cosmos is a cross-chain interaction which uses “Hub” as a relay and combines other “Zones” into a structure of internet of the blockchain. Inside Cosmos, tokens can be transferred freely from one Zone to another through Hub.
Polkadot, on the other hand, is a heterogeneous multi‑chain network. Through Polkadot, different blockchain can communicate with each other and achieve scalability.
- Sidechain Technology
Sidechain is a blockchain that runs in parallel to the main blockchain. A sidechain uses The same consensus protocol as the main chain is used by the Sidechain, and the sidechain can also validate transactions on the main chain. Typical sidechain projects include Bitcoin Sidechain Rootstock.
- Distributed private key management technology
Wanchain and Fusion are typical examples of distributed private key management technology. Wanchain uses secure multi-party computation, ring signature schemes, and achieves cross-chain transactions as well as interoperability of multiple blockchain.
To map various crypto assets onto Fusion public blockchain, a process called lock-in is used and Fusion uses distributed private key generation and management technology. The crypto assets can interact with each other through Fusion smart contracts.
These are just a few of the highlights of the research conducted by Huobi Pro’s research wing and the best way to grab a copy of this extensive report is to attend the blockchain festival in Vietnam which is being held on 24th and 25th May 2018. The details of the festival are as below:
Use Discount Code:WRITE50 to get 50% off your ticket price. If you are a student, it is free for you to attend and it also gives you an opportunity to interview with the hottest blockchain professionals in the space.
Stay tuned for the next articles to find out more about the developments into the blockchain as per the research conducted by Huobi Academy of Blockchain Application
-Pankhuri Bansal
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