Blockchain technology has seen a meteoric rise in acceptance over the last few years, notably in some industries.
But does this technology really have the potential to rewrite the laws of every industry it enters?
Is Web 3.0 the future?
Are we right in comparing this technology with the Internet and dot com revolution of the 90s?
We analyse the challenges first and the possible solutions that can combat these.
1. Scalability in terms of data storage
2. Scalability in terms of transaction speed and throughput
3. Security/Decentralization tradeoff
Challenge I. Data storage
For a secure blockchain infrastructure, the verification and availability of data to all participants is crucial. Currently in all blockchain protocols, each node stores all states and processes all transactions.
This provides security, but greatly limits scalability: a blockchain cannot process more transactions than a single node.
#1. Plasma — The Scalable Smart Contract
Plasma is a way to achieve scalable computation on the blockchain autonomously, which enables the contract creator to persistently use the blockchain without active state transition management.
The system is designed so as to create blockchains on blockchain, and it aims to encompass all worldwide computation and reframe them into a set of MapReduce functions.
Mainstream use of this technology, apart from solving the issue of scale, also offers economical incentives like Proof of Authority which can surely contribute to its growth.
#2. Storage solutions
Storj, one of the first and most successful decentralized storage networks on the cryptosphere, was developed using blockchain as core technology. The project started out using a Bitcoin-based asset but later moved to an ERC20 token on the Ethereum Blockchain.
This token, the Storj Coin (SCJX), is used by customers to pay for storage and acts as an incentive for nodes that keep part of the client’s files.
These files have been previously shredded, encrypted, and distributed to multiple nodes to ensure their safety and availability.
#3. InterPlanetary File System (IPFS)
InterPlanetary File System IPFS is a distributed file system that seeks to connect all computing devices with the same system of files. A peer-to-peer (P2P) file sharing system, the IPFS provides historic versioning for files, removes duplicates and even allows users to save on bandwidth since files are downloaded from multiple computers.
IPFS provides high throughput, low latency, data distribution besides being decentralized and secure, which opens up a great many possibilities.
Sharding breaks down a transaction into shards and spreads it among the network. The nodes work on individual shards side-by-side, decreasing processing time.
Zilliqa, a new blockchain platform has implemented sharding with positive results so far.
Despite being a much more efficient alternative to conventional blockchain processing, sharding has its own challenges such as node or shard exhaustion, slow recovery options and cloudbursting, to name a few.
Of course there are other bottlenecks towards scalability such as disk reads and the fact that every node has to validate the whole state. Also smart contracts not being parallelizable at the moment is a huge problem in itself.
Solutions to the scalability problem are being continuously modified, hence it can be safely concluded that one among these, or perhaps an intelligent combination, can help resolve this issue and propel the blockchain technology to greater heights.
We will be tackling the next challenge in the next episode. Stay tuned!