Is it possible to for cryptocurrency and blockchain technologies to close in on perfection? One commentator notes that perfection is “utopic,” and difficult to define in unclear world of crypto and blockchain.
The Chief Operating Officer at the Wall Street Blockchain Alliance, Steven Ehrlich, ventured into answering these inevitable questions in an article for Forbes. According to Erlich, in the current state of the industry, not much can be anticipated. The measures they’re most often wrong about are also the ones standing at the core of crypto: privacy, decentralization, and transaction speed.
Some Attempted to Improve Bitcoin’s Speed
The first cryptocurrency, Bitcoin (BTC) 00, faces community-wide problems: while it offers undisputable decentralization and a reasonable degree of privacy, its speed cannot be relied on for serious economic operations. Its scalability issues — Bitcoin can only work with 7 transactions per second — prevent it from becoming a global currency. Not to mention, most of the solutions brought forth so far decreased its decentralization in return.
To illustrate his train of thought, Ehrlich pointed out to the lightning network, a “second layer” on top of Bitcoin’s (or other cryptocurrencies’) blockchain that enables low-value transactions without actually engaging the blockchain itself. He went on to say:
However, with this increased capability also comes with a degree of centralization that can create vulnerabilities because lightning payments, by nature of their status as a second-layer ‘off chain’ technology, do not fully utilize the secure nature of the Bitcoin network for each payment.
Others Tried to Work on Privacy
Zcash, for example, is a Bitcoin fork turned “[…] privacy-protecting digital currency.” This new cryptocurrency has encountered even more obstacles. Compared to Bitcoin, Zcash implements some additional privacy features — including a slightly faster network while still continuing to utilize the proof-of-work protocols.
In order to allow all these features to unfold, Zcash consequently requires either supplementary computing power or the compromise of other features in exchange. It turns out that Zcash chose the latter and consequentially ended up very similar to Bitcoin itself. These issues are expected to be tackled after Zcash’s next upgrade, due in three weeks.
Finally, Projects Use the Window to Join
Blockchain, like Ripple, is aiming for speed by renouncing decentralization. This allows them to assign a limited number of nodes to a chosen few authorized users. The network consequently becomes much stronger and more secure as the proof-of-work algorithm is no longer required for validating each transaction. As the blockchain is no longer strained by heavy computations, these projects can subsequently add other useful features like as privacy,
Building a blockchain that eludes all the obstacles mentioned above is utterly difficult — if not “utopic,” as Ehrlich put it. However, as long as there are solutions and alternatives for each of these burdens, there is no reason to worry. “This is not a bad thing as nothing in this world is supposed to be perfect,” he concluded.
If this holds true, the endless debates that currently populate the crypto world are deemed superfluous: why argue when you can simply choose whatever works best for you?
Do you think the possibility of closing in on a “perfect” blockchain exists? Let us know in the comments below!