Pros & Cons of Digital Platforms
Ethereum has acted as Ground zero for the ICO projects to be offered to the general public and the vast majority of over 90% token emissions still occur on the basis of the Ethereum platform. However, with the rapid development of the Blockchain ecosystem recently, new entrants in the platform arena are going to challenge its supremacy in the coming weeks & months. We are already beginning to see projects being launched on promising platforms like NEO, NEM, Stellar, and Waves.
ETHEREUM — Release date July 30, 2015 (most popular platform; second most popular Crypto)
- Can host ICOs: Simple & quick launch of your digital coins based on the native ERC 20 tokens which are widely accepted & used as standard. You will, however, have to program your digital tokens with the functionality you want them to perform.
- Global benchmark: Ethereum is the biggest blockchain infrastructure at
the moment with a vibrant & skillful development team that continues to strive to improve scalability, security & functionality of the platform (e.g Casper, Sharding).
- ASIC resistant: Ethash (Ethereum hashing algorithm) is resistant to ASIC mining chips, thus keeping the greedy miners away from the network. Also, the move from PoW (Proof of work) to PoS (Proof of Stake) algorithm provides another layer of security from ASIC mining.
- Universal solution: Ethereum provides a universal solution by which you can sync your system to its blockchain & let the network manage everything for you thus providing you with a one-stop-shop.
- Excessive flexibility: Research by the National University of Singapore has shown that increased flexibility of smart contracts can be used by hackers to manipulate & attack the network.
- Low TPS rate: Network has a slow speed of 15 TPS (transactions per second).
- Inefficient consensus mechanism: Ethereum for now, uses a PoW consensus mechanism that is slow, inefficient & energy-intensive. Transaction costs are relatively higher as compared to other networks — $0.16 at the time of writing.
- Lack of Autonomy: Since you are “renting” the network per se, any fees paid or development goes towards the enrichment of the Ethereum blockchain solely & you have no say in any matter. Also, if the network goes down so do your smart contracts.
NEO — Release date February 2014 (China’s Ethereum)
- Can host ICOs: Scalable decentralized platform with an impressive speed of 1000 TPS with no transaction fee for 20 transactions per block, however, the user can pay a transaction fee to receive priority.
- Efficiency: NEO works on dBFT (Delegated Byzantine Fault Tolerance) protocol which is considered more efficient than PoW or PoS since it is based on a democratized voting model.
- KYC functionality: As a part of the token sale process anybody looking to invest in NEO has to go through a Know Your Client (KYC) process to cross-check with AML (Anti Money Laundering) lists, which helps in compliance of the current financial regulations.
- Divisibility issue: Perhaps the biggest drawback for native NEO tokens has been the case that they are not divisible like other digital coins and can only be assigned a whole number integer value. But according to a recent announcement, NEO tokens in the future will be divisible.
- China-focused: The project is based out of China & all the information is in Chinese which is difficult to understand & comprehend for the foreign investors. Also, stringent domestic policies on Blockchain/Crypto related projects put some doubt about the future of the project. Having said that it can easily go towards their advantage if the regulatory framework is figured out since China is the biggest Crypto market.
- Poor decentralization: The dBFT consensus protocol implies the community-based selection of bookkeepers (digital ledgers) who validate transactions, causing a decrease in the decentralization of the network.
NEM — Release date March 31, 2015
- Can host ICOs — An Impressive speed of up to 4,000 TPS on private networks with a transaction fee of 0.05 XEM per 10,000 XEM with a maximum capped at 1.25 XEM
- Business Compatibility: The NEM blockchain has been built around the premise where it can be customized to serve any businesses’ needs. No need to disrupt the current infrastructure by putting a new system in place from scratch. You can have an open & decentralized or a private & permissive network.
- Private chain speed: As an upgrade to the existing network NEO introduced the Catapult engine which incorporates smart contract plugins for public & private networks. These plugins help in the seamless creation, efficient swapping & advanced accounting system execution of the digital assets.
- Security: NEM offers increased security with its Proof of Importance consensus protocol and two-tier architecture. This consensus algorithm also takes into account one’s overall support of the network, unlike the PoS algorithm which encourages hoarding. New blocks are created with a process called ‘harvesting’.
- Easy to use: The API driven platform makes it easier to use making Project development a breeze on its friendly architecture.
- Low speed: At the moment, the project has artificially lowered its speed to 2 TPS
- Customized for corporations: The biggest drawback for NEM is that it primarily focuses on business entities, not on traditional ICO projects which gives it a narrow scope of functionality.
STELLAR — Release date April 08, 2015 (Ripple’s competitor)
- Can host ICOs: With corporate backing & wider acceptance especially from IBM which is using the Stellar network & native Lumens (XLM) for multiple projects including banking transactions & stable coin.
- Finance-specific: Stellar was originally an offshoot (hard fork) of Ripple, created to facilitate financial transactions using its own consensus mechanism based on the Federated Byzantine Agreement which is the core of the Stellar Consensus Protocol (SCP).
- Fast performance: 1,000+ TPS with one block being created every 3–5 seconds
& a very low transaction fee of $0.00001.
- Increased security: Stellar uses multi-signature verification in its smart contracts using a web application called StellarGuard.me
- Smart contracts are less flexible than those of Ethereum.
- The execution of smart contracts is expensive.
WAVES — Release date June 07, 2016 (Russia’s Ethereum)
- Can host ICOs with a unique implementation of smart contracts with strong corporate & government partnerships. Based out of Russia with huge potential for growth in that untapped market.
- Speed & Supply: The original max speed was 100–300 TPS but with the implementation of the new Waves-NG consensus protocol, it can potentially reach up to 1,000 TPS. A finite supply of waves tokens of 100,000,000 will avoid the problem of inflation
- Smart contract predictability: It uses Turing-incomplete language which guarantees the predictability of how smart contracts will execute after initiation.
- User-friendly: Waves is considered to be the easiest platform to use for ICO and smart contract writing with its simplified process of token creation.
- Embedded DEX: Waves has its own decentralized exchange (DEX) on which you can easily swap waves tokens. This functionality gives it the biggest edge among all the platforms
- Lower flexibility: Non-Turing-complete smart contracts are less flexible compared to Turing-complete due to the nature of their programming language.
- Poor adoption: Waves has not hosted any big ICOs yet, therefore technical issues & vulnerabilities may be discovered as the platform gains new users & launches more ICOs
Crypto & Blockchain markets are maturing as we see more innovative projects coming through improving on the shortcomings of the previous ones and offering better functionalities & quicker adoption.
Originally published at www.datadriveninvestor.com on September 5, 2018.