From Blockchain to no Chain
Blockchain is a distributed ledger technology (DLT) where transactions are recorded in the form of Blocks that are linked cryptographically to form a chain. It is the underlying technology behind many cryptocurrencies such as Bitcoin. While Blockchain is a transformative technology that can potentially disrupt a wide range of industries, it is not without its drawbacks.
The HelixTangle represents a block-less and chain-less solution to the world of Distributed Ledger Technologies. It is a next-generation DLT that is based on Directed Acyclic Graphs (DAGs), instead of blocks chained together. This article will highlight problems faced by existing DLTs, and how the HelixTangle addresses these issues.
1. Blockchain Consumes Enormous Amounts of Energy
Satoshi Nakamoto designed Bitcoin in a way such that anyone can take part in the process of updating transactions. However, there’s a catch. Updating transactions require users to solve a hashing algorithm called SHA-256 that involves some tough math. The fastest computer that validates a bunch of transactions on the ledger earns Bitcoin. This is known as mining, and the complex hashing process is called proof of work. Mining ensures that the Bitcoin ledger is maintained and updated regularly.
Solving the SHA-256 algorithm requires brute-force computing to speed up the hashing process and eventually generate more rewards for the user. Only expensive specialized computers stand a chance at solving these cryptographic puzzles. This process consumes a lot of energy since computers would have to remain switched on for long periods of time, in order to come up with as many answers as possible.
Competition for profit has largely driven the Bitcoin blockchain to consume as much electricity as Denmark, with costs surmounting to almost $3 Billion. Furthermore, coal-based power plants in China fuel the Bitcoin network resulting in an extreme carbon footprint for every transaction.
At a time when the world is grappling with global warming, Helix serves as a sustainable alternative to existing distributed ledgers such as Bitcoin. Unlike Blockchain-based DLTs, Helix adopts Proof of Useful Work (PoUW) to confirm data on its ledger. Peers on the HelixTangle can put useful data into the ledger and allow compute nodes to operate on this data, significantly reducing the system’s wastefulness.
In short, the HelixTangle requires no mining and eliminates the need for miners or expensive hardware. The Proof of Useful Work feature of the HelixTangle results in potential zero waste and prevents wastage of energy resources.
2. Transactions on the Blockchain are Expensive
It is estimated that large mining farms control 51% of the nodes on the Bitcoin network, making the system susceptible to attacks. Miners leave their computers switched on for 24 hours to validate transactions. This comes at a cost. The rewards that miners earn from authenticating transactions on Blockchain-based DLTs comes out of the pocket of users transacting on the network. And boy, aren’t they expensive! In early 2018, people paid a whopping $28 on average to carry out Bitcoin transactions.
Directed Acyclic Graphs (DAGs) ensure that the HelixTangle arrives at a consensus with no demand to trust a central authority. The HelixTangle requires no miners, and users can now directly transact with each other for free. The Helix network caters to the needs of the emerging machine economy by being fee-less and requiring no intermediaries to facilitate transactions.
No Miners = No Fees
Furthermore, high transaction fees charged by existing DLTs make it pointless to carry out low-value transactions. Helix, with its ‘Zero cost on the protocol’ policy, allows users to execute quick, any-value transactions between each other.
3. Blockchain Fails to Scale Up Efficiently
The spectacular rise of Bitcoin brought unprecedented interest in Blockchain, with many expecting the technology to disrupt a wide range of industries. Today, people adopting DLTs only make up a small fraction of the world’s population. However, the industry is gaining traction with companies such as Helix working tirelessly to educate the public about distributed ledgers. As adoption increases, can existing DLTs efficiently scale up?
This looks bleak at the moment. The mining award system temporarily disguised costs associated with transacting Bitcoin. Bitcoin has a 1MB size limit on blocks built into the system. As the currency grows and transactions increase, block size limitations impose capacity constraints on the network, thereby escalating fees and delaying processing transactions.
Scalability limits of existing DLTs mean that the confirmation rate does not increase with the transaction rate, while the rate of waste rises with adoption. With Blockchain catching up with this reality, the time has come to portend towards a technology that can efficiently scale up with adoption — HelixTangle. The speed of transaction confirmations in the HelixTangle increases as more and more people and things use it. This feature is made possible by the HelixTangle‘s unique underlying data structure — Directed Acyclic Graphs.
Every transaction on the HelixTangle verifies two previous transactions. As a result, settlement times become much quicker once more users transact on the network. It is estimated that the HelixTangle can practically achieve at least 1000 confirmed transactions per second per node, a significant improvement on the paltry 3 transactions carried out by a traditional Blockchain.
Bitcoin took the world by storm when it’s price skyrocketed in late 2017. However, much of the focus has been on the price of cryptocurrencies rather than actual use case development. In his excellent article, Brian Schuster explains that the price crash of cryptos could have been prevented if adoption rates would have stayed up with the valuation. So why is the rate of adoption slow?
It is a known fact that new technologies in the market are slow to be adopted. However, distributed ledgers are not like social media applications on the internet, where users can quickly make the transition from one service to another. It’s an entirely different beast that requires educating the public from grassroot level. To gain mass adoption, companies in this space need to convince people to believe in their product. One cannot deny that cryptocurrencies did invest a lot of resources in generating hype for their product. However, businesses need to do a lot more than that to create long-term value. That’s where education comes in to play.
The HelixFoundation is responsible for building the HelixEcosystem and understands the need to explain the technology for all ages in the simplest possible way — from how transactions are sent on the HelixTangle to creating decentralized applications on the network. Over the coming months, Helix will release a series of blogs and interactive videos for this purpose.