- February 7, 2023
- Posted by: Shalini W
- Category: Information Technology
The first application of blockchain technology occurred in 2009 when Bitcoin was released. Since then, companies from other industries have begun experimenting with the technology. It is currently utilized in several sectors, including health records management, supply chain tracking, and video games.
The addition of smart contracts to Ethereum and other blockchains has widened the scope of this groundbreaking technology’s applications. In many ways, blockchain technology is still in its infancy, comparable to the early days of personal computers when they were mostly utilized by enthusiasts.
Since then, technology has progressed to the point that we can do almost anything online, from watching television to purchasing groceries.
We anticipate a similar trajectory for blockchain in the future. To succeed in every industry, it must first possess the characteristics required for widespread adoption. Let’s investigate whether these traits are present in any existing blockchains.
High bandwidth, minimal latency, and scalability
Web 3.0 technology must provide users with additional benefits above Web 2.0 technology. A crypto project is more likely to succeed if it delivers faster transaction speeds.
TPS (transactions per second) is the number of transactions that can be executed per second on a blockchain network. It is also known as the “throughput rate.”
Visa’s network can process up to 24,000 transactions per second, whereas Mastercard can handle up to 5,000 transactions per second. According to a recent interview with Visa’s chief financial officer, the network could theoretically process 65,000 transactions per second.
However, while developing DApps (decentralized applications) and utilizing digital assets, achieving the lowest latency is more important than achieving a high number of transactions per second.
The user desires transactions to be processed as rapidly as feasible. No network load, they constantly want something.
Scientific evidence exists to back it. According to a 1993 article by Nielsen Norman Group, application response times impact the user experience.
A response time limit of 0.1 seconds gives the appearance to the user that the system responds rapidly.
With a one-second response time limit, the user’s mental process remains uninterrupted, despite the delay being perceptible.
After a response, the user’s focus can only be maintained for ten seconds. While waiting for the system to complete the activity, the user may be tempted to perform other tasks.
As a result, you, as a user, desire the lowest latency or verification time and the largest TPS. This is what ‘quick’ refers to, not just the number of transactions executed per second.
These characteristics collectively represent the scalability of a blockchain network, or its ability to handle an increasing number of transactions over time.
Nonetheless, TPS statistics are significant, and we need them to comprehend the potential of a blockchain.
The transaction speeds of the top 50 blockchain networks by market capitalization as of September 2022 are listed below.
Solutions for layer one versus layer two scaling
Working on a blockchain’s layer one is the most efficient technique to improve its parameters. This requires validators to accept changes via a hard fork, which is a complicated procedure, as we recently observed with the Ethereum merging.
Through layer two scaling solutions, it is feasible to achieve scalability more quickly by modifying the architecture of a blockchain network’s base layer. The blockchain community is therefore busily researching layer two scalability techniques.
This is exemplified by the Bitcoin Lightning Network, which is currently capable of handling over one million TPS compared to Bitcoin’s 7 TPS.
However, layer two can jeopardize a substantial portion of the original blockchain’s security. When removing layer one components, you are frequently forced to rely on the layer two team and network to maintain the system operationally and safely.
In light of this, a substantial proportion of users exclusively trust Bitcoin-like networks due to their lengthy security track record.
The scalability of blockchains could evolve in the future in a variety of ways, such as through new consensus processes or layer two scaling approaches that do not compromise security. If we wish to construct the most efficient blockchain for the future, testing both approaches will not be detrimental.
Different consensus algorithms, such as proof-of-authority, activity, RBFT, and YAC, are being investigated as alternatives to proof-of-stake and proof-of-work as blockchain technology advances. However, the majority of available algorithms have security or performance shortcomings.
Nonetheless, if we were to choose one blockchain pillar, it might be security. Using open-source blockchain code and cutting-edge cryptographic methods, the maximum level of data protection should be the default setting.
Additionally, blockchain security audits are essential for discovering and eliminating system vulnerabilities. The public discussion of security measures is also essential for identifying impractical options. These blockchains have a bright future ahead of them.
When users transmit crypto, they do not wish for it to be lost en route to the recipient. Therefore, the dependability of a network is an essential feature.
As an illustration, Solana is well-known for its speed and excellent solutions, yet infamous for its network disruptions. According to Solana’s uptime tracker, there were fourteen outages totaling four days, twelve hours, and twenty-one minutes of downtime in 2022.
Zero or little network fees
Visa costs businesses approximately three percent for payment processing. We must, among other things, offer lower fees if we want these businesses to abandon Visa in favor of cryptocurrency. Similarly, network fees are a significant barrier to access for everyday consumers at now.
When first-time users discover, for instance, that Ether is required to send USDT to a recipient, they often abandon cryptocurrencies completely. Similarly, the requirement that users possess Ether to access DeFi applications and other DApps presents significant access and usability difficulties.
Meta transactions, which allow users to engage with a public blockchain without incurring transaction costs, could be the solution to this issue. Meta transactions continue to be validated and transmitted using user signatures.
In this case, the transaction is handled by the relayer, who pays the transaction charge and transfers the transaction to the recipient. There is a strong likelihood of success for a blockchain that incorporates this principle.
Ability to accommodate new use cases.
It is crucial that the blockchain of the future not only saves information but also facilitates the exploration and development of new use cases. An example would be programmable money that can only be spent by the terms of a smart contract.
Blockchains with specialized MCCs (merchant category codes) can offer this capacity, unlike Web 2.0 banking. The technology can be utilized by both governments and businesses, for instance, to reward staff.
There is a definite trend towards the deployment of programmable money in the future, notwithstanding the debate surrounding it, and blockchains must adapt to satisfy this demand.
Future blockchain technology is anticipated to be extremely user-centric, with streamlined authorizations, meta-transactions, HRAs (human-readable addresses), and additional features.
It is difficult to deliver cryptographic addresses without QR codes or text messages. In the event of a single error, a transfer could be routed to the incorrect recipient and be permanently lost.
These difficult-to-remember strings of code designed for machines – not people — impede wider adoption. Future blockchains must address this issue, and some are already doing so, such as the HRA-capable NEAR Protocol.
In some crypto wallets, it is already feasible to send cryptocurrency to a receiver’s phone number, even if the recipient lacks a wallet address.
A wallet can be created by users without one using an intuitive interface. This strategy may be problematic in terms of pseudo-anonymity, but it is certain to increase use and acceptance.
There is no inherent capacity for blockchains to communicate with other blockchains. This constraint, known as the oracle problem, hinders blockchains from engaging with traditional systems and with one another.
For many blockchain networks to exist in the future, they must exchange data and transfer distinct forms of digital assets.
Public blockchains should ideally be constructed compatible from the beginning, although this is not always the case. To succeed in the future, Blockchain project developers must know that they must exchange information and communicate.
Metakey and Immutable X’s Web 3.0 gaming blockchains, which are developing an interoperable gaming environment, and ChainLink’s oracle infrastructure, which connects existing systems to all major blockchains, are two excellent examples.
Possibly, there will not be a future blockchain that accomplishes everything for everyone. Instead, there would be different blockchains for different purposes, just as there are many industries for different uses in the real world.
It is anticipated that numerous blockchains will continue to serve specialized purposes, such as gaming blockchains, supply chain blockchains, etc.
Although a future blockchain should have many more properties than those described above, these are the most important. A prosperous Web 3.0 future requires achieving a balance between security and usability while keeping the user and crypto community in mind at all times.
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