Blockchain , Bitcoin and Beyond
Its almost decade since Bitcoin first came into being. The idea was to create digital currency which is free from any government control. It’s about freedom and liberty they said.
Major Promises
- Government or any other authority will never know as how much money you hold and your transactions won’t be traced back to you. There will be 100 % privacy.
- Cross border payments and money transfer will be on real time without any third party involved to facilitate payment. Yeah no one making cut on your payment. Its the community as whole which will create the network of trust using blockchain technology.
Well we still don’t see Bitcoin (or any other crypto currency) being used in main stream buying and selling.
What went wrong?
- Transaction time is in minutes and hours compared to seconds in centralized systems (except the cross border payments). Bitcoin can’t scale beyond 7–10 transactions per second.
- Minors are free to pickup transactions from available pool of transaction while creation of block. Transaction even after being picked up by minor for block may end up back in the pool if part of block which was discarded by the network. There is just no fairness.
- One has to wait until the time you are sure that your transaction (block) is not going to be discarded. There is off course no guarantee of finality. It’s only the probability which increases with time.
- Bitcoin minors tend to consolidate to location where electricity is cheap. There is risk of government crackdown and takeover of the network.
- Governments are banning Bitcoin and other crypto currencies.
I am no way trying to dismiss blockchain as technology for future. I am in-fact arguing that Blockchain will go the path of internet when it comes to the path of evolution.
For example Internet moved to where it is today with many generation of evolution.
Telecom Networks → Packet Switching Networks → ARPANET → TCP/IP (OSI) → Internet of Today
The above is the simplistic view of path of evolution of internet. This however was not this simplistic if we go back in time and explore the history of internet.
ARPANET is one which succeeded but there were many more networks. It’s just ARPANET was successfully able to solve problems and grow around the open standards. Open Standard was very crucial for one single network to be where it is today.
In case you have noticed we are in almost similar when it comes to Blockchain networks. I am convinced that we will reach to the maturity of internet in next decade itself.
There are many but it all started with Bitcoin. I have listed some problem with Bitcoin technology which has prevented it to become main stream.
It so encouraging that there are other platforms which have already solved these problems.
For example take the Hashgraph technology. Which essentially a consensus algorithm seems to have solved many problems already.
Scalability : Hashgraph can achieve 250,000+ transactions/second in current avatar.
Finality : There is finality of transaction which is not based on probability. Its based on ‘Gossip of Gossips Protocol ’ and Virtual Voting.
Fairness : Transactions are not at the mercy of minors to get picked up to be part of ledger. Transactions get picked up as they are executed.
My intention is not to discuss Hashgraph here but to point out innovations happening in the blockchain ecosystem.
There is only one problem I see with Hashgraph is that it’s not an open standard but patented technology. This limits everyone to contribute in the growth of Hashgraph as universally accepted standard.
There this Hyperledger Fabric which I see very promising for enterprise adoption.
It also solves many problems I have listed for bitcoin . The most promising part of the Hyperledger Fabric is its architecture. It’s modular and ready for further evolution based on open standards. Hashgraph consensus algorithm itself could be used as consensus algorithm for Hyperledger Fabric.
I believe there are two things has to happen for blockchain to get the maturity of internet.
Open Standards : There should be investments to evolve open standards. This will allow everyone to contribute and benefit. I hope to get something like TCP/IP.
Government Involvement : Governments should be taken as party to the evolution. It was same for internet itself. Now we talk about internet has made governments more accountable and but one has to understand that technically governments can control the internet. It’s just that it has become so big to control it in all aspect. Let it be same for blockchain.
I am overall very optimistic about blockchain and it’s becoming mainstream in coming decade or so.
