Blockchain Is Booming. But This Is The 1 Thing Holding It Back From Widespread Adoption
Blockchain has been all over the news the past few months.
In 2017, the technology went from being a little known idea prompting raised eyebrows and speculation, to a disruptive solution that has caught the attention of massive industries ranging from big pharma to entertainment, journalism to finance.
For those that don’t know, a “blockchain” is essentially a public ledger where the massive network of users verifies each and every transaction. The most popular blockchain platform, Ethereum, has allowed developers to create what are called dApps—decentralized applications—that leverage Smart Contracts, meaning processes can be easily automated and executed between various parties.
Why Ethereum and blockchain technology as a whole is so intriguing is because it’s capabilities inherently solve some of the most prominent pain points in a wide variety of industries. Take finance, for example. In the financial world, banks have to act as the middleman between all transactions. They are the ones who verify that person A is sending money to person B—and sometimes, that verification process can take quite a while (like when sending money between countries). But more than that, banks are centralized systems, meaning they ultimately control how, when, and where money is sent between parties.
On the blockchain, there is no bank. In fact, there is no centralized system at all.
Blockchain is a decentralized network where the users act as the verifiers for one another, essentially creating a sort of free economy. And in 2017, we’ve seen that what originally was a very utopian approach to the financial world has since proven to be quite viable.
The only problem is scaling the number of transactions that can take place at any given time on the blockchain.
As it stands, the Ethereum network can only process about 10 transactions per second. When you think about what true mass adoption looks like, and how many people in the world could potentially use the Ethereum network to send and receive funds, 10 transactions per second doesn’t cut it. Ethereum will need to process around 100,000 transactions per second in order to achieve the same scalability to compete with the financial model that exists today.
In the booming world of blockchain technology, this is a known issue.
One of the blockchain platforms currently looking to solve this glaring pain point for the Ethereum network is Raiden, with the goal of moving a large amount of the transactions off-chain so the Ethereum network can act more as a ledger to settle netted claims from off-chain activity.
In a nutshell, this means Raiden wants to create a way to remove some of the stress from the primary network, so that the number of users can scale faster and more effectively. And the more users that participate, the more transfers can be executed. After all, that’s the beauty of the concept of blockchain. The network acts as its own verification system.
The other pain point Raiden is looking to solve for the Ethereum network is the fact that in order for true mass adoption to take place, transfer costs and wait times will both need to be significantly reduced. With scale, transfer costs should be lowered to match widespread demand, and in order to compete with more conventional payment methods, users cannot wait minutes for their transfers to go through. Minutes need to be reduced down to milliseconds.
In order for blockchain to truly become a mainstream solution, scaling needs to improve its capabilities with each added user—not slow them down.
Raiden is a great example of how much opportunity there is in this space. While Ethereum has effectively positioned itself as the go-to platform for developing dApps, there are still so many different scenarios in which blockchain processes can be improved. In order for true scalability to be achieved, multiple parties and platforms will need to work together to tackle different pain points in order to make blockchain a viable solution.
2018 will be the year we begin to see more and more blockchain platforms with the sole focus of improving upon the underlying technology and help make it more effective.