Where is the next breakthrough in the public chain market?

Blockchain technology has enormous potential, and over these past few years, we got to see the innovation in real-time. Blockchain is revolutionizing the finance sector, from ICOs to decentralized exchanges, prediction markets, lending protocols, and asset management platforms.

Public chains like Bitcoin and Ethereum are hype no more but a real deal attracting mainstream users and investment. But they are not issue-free. Blockchains have several significant technical barriers which prevent them from being used at scale by billions of people.

Limited scalability is one of the most prominent limitations of public chains. While a decentralization consensus mechanism offers us security guarantees and censorship resistance, it comes at the cost of scalability since decentralization limits the number of transactions the blockchain can process. With no central part responsible for securing and maintaining the system, the transaction processing becomes time-consuming and costly.

For instance, Bitcoin’s block times are 10 minutes, while Ethereum can manage about 15 transactions per second (TPS). These networks further slow down during peak moments.

Limited privacy, lack of formal contract verification, storage constraints, unsustainable consensus mechanisms, lack of governance and regulatory clarity, and inadequate tooling are other barriers to the mass adoption of blockchains.

Growth of Alternative Public Chains

Over these past couple of years, the scalability issue has become critical as more people join in and developers build applications for the real world. Scalability is a giant roadblock to the future success of crypto platforms.

But as the most popular blockchain Ethereum grapples with this issue, several alternative public chains have entered the market and become quite popular among the audience. It makes sense given that users, especially the retail, have been looking for cheaper and faster ways to interact with dApps.

In 2021, Binance Smart Chain (BSC) rose as a top-performing network with fast-growing ecosystems and huge growth potential. It mainly gained immense traction among smaller users by allowing them to try innovative and exciting new projects at a fraction of the cost of Ethereum. In a matter of four months, BSC amassed $31.50 billion, according to DeFi Llama.

Even cryptocurrency exchanges entered the market with their own chains. For instance, Huobi Global launched its decentralized, high-efficient, and energy-saving public chain called HECO.

This growth of newer blockchain platforms has resulted in a drop in the market share of major crypto networks Bitcoin and Ethereum.

Driving Public Chain Growth

As we saw in 2021, the growth of the overall cryptocurrency industry led to the popularity of several new public chains, giving developers new platforms to build decentralized applications.

The next trend to promote the development of the public chain may be generated from DeFi (decentralized finance), NFT (non-fungible tokens), GameFi (play-to-earn games), Metaverse, or CBDC.

According to some experts, the Metaverse alone is an $8 trillion addressable market. Meanwhile, the NFT boom has already hit $25 billion in sales volume in 2021.

This explosive growth of DeFi, NFT, and other notable innovations leads to new problems and challenges to Ethereum’s capacity. Meanwhile, it has created new opportunities for public chains that can help onboard millions of new users while providing faster and cheaper transactions and quicker processing times.

These new trends demand highly scalable blockchain, which means we’ll be developing public chains suitable for high-frequency mass services such as communications, social networking, games, big data, artificial intelligence, and IoT.

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