Bitcoin - the original and still de-facto blockchain of choice recently reached its tenth birthday. A mere 10 years later, and the network is still capped at around 7 on-chain transactions per second, with an average block confirmation time of 10 minutes.
While it is all-but certain that these technical barriers will eventually be a thing of the past, it is important to note that there are now a range of innovative and somewhat disruptive alternatives that the industry should keep an eye on.
Whether it's through increased scalability capacities that can now compete with global legacy systems like Visa, consensus mechanisms that utilize the ever-growing abilities of artificial intelligence, or institutional-grade security that counters the threats of quantum computing of the future - the blockchain industry is moving at an exponential pace.
Here are some of the most notable examples of projects that are playing a leading role in the development of next generation blockchains.
Increase Blockchain Scalability
True. Bitcoin’s scalability and speed departments aren’t doing so well. But what can’t be disputed is the network’s ultra-strong security defences. In fact, this is one of the overarching reasons that a number of influential Bitcoin developers are against increasing the maximum block size as a means to increase speed and scalability - as it is feared that this will reduce the network’s stronghold on security. In return for ultra-strong security, efficiency levels suffer.
However, one such solution that could ease the aforementioned concerns is that of Schnorr Signatures. In its current form, Bitcoin dedicates a significant amount of storage to digital signatures. If, for example, you wanted to send funds from multiple Bitcoin addresses to a single address, each and every transaction would require an individual signature.
On the contrary, Schnorr Signatures would allow the same batch of transactions to be digitally signed just once - subsequently making the underlying blockchain significantly more efficient. Schnorr Signatures can also demand that joint-wallet owners are each required sign a transaction before authorization is granted.
AI and Blockchain go Hand-in-Hand
A project that warrants a mention is that of Velas. The Switzerland-based startup is looking to expand on the capabilities of blockchain and artificial software by also taking into account the decision-making process of human consciousness. The team at Velas refer to this innovative theoretical breakthrough as ‘Artificial Intuition’.
Supporting the Velas blockchain ecosystem is a unique consensus mechanism it calls ‘Artificial Intuition Delegated Proof of Stake (AIDPOS).’ In layman terms, the AIDPOS framework achieves the perfect balance between speed, scalability, decentralization and security - something that first generation blockchains such as Bitcoin and Ethereum are yet to achieve.
In fact, Velas claims that its proprietary network is able to handle upto 30,000 transactions per second. A transactional throughput as high as this would be capable of facilitating virtually any requirement in a real-world setting, especially when one considers that the global payment network of Visa requires just 1,700 transactions per second.
At the same time, the AIDPOS framework requires a validation consensus of 80%, subsequently ensuring that the network remains safe at all times. This includes a water-tight defence against 51% attacks and double-spending attempts.
Bring Decentralization to the Web
Many involved within the blockchain technology arena have argued that decentralization should further extend to the World Wide Web. In other words, much like in the case of an immutable blockchain infrastructure, information on the internet should remain online permanently - free from the threats of censoring.
One such project that has recognized the need to bring decentralization throughout the digital ecosystem is Arweave. Through its revolutionary Permaweb, not only does the technology facilitate low-cost, highly scalable online data storage, but the information cannot be amended or manipulated by any third party actors.
This was especially useful earlier in the year where the Cogen & Company audit of TrueUSD was transparently placed on the Permaweb. It is also worth noting that over 50 individual dapps - such as Scribe, Email Proof and Albatross, have already built their applications on top of the Permaweb, with numbers of users growing rapidly.
In terms of the underlying technicals, which are the advancements we should mostly be eyeing - Arweave utilizes a next generation version of distributed ledger technology. Known as Blockweave, the protocol validates blocks by 'weaving' them through the network - as opposed to the linear fashion that existing blockchain frameworks often rely on.
As the amount of data stored in the network increases, the amount of hashing needed for consensus decreases, thus reducing the cost of storing data, making it much cheaper than recurring fees from crypto- and traditional competitors.
The Blockweave uses an innovative consensus mechanism known as Proof of Access that allows a network speed of up to 5,000 transactions per second (TPS). In addition, Arweave introduced blockshadowing, a flexibly-sized transaction block distribution algorithm that improves on current sharding techniques by other blockchains.
The Future of Blockchain Technology is Bright
Whether its slow transfers, an inability to scale, or inefficient transaction validation processes - next generation projects are developing real-world solutions to these many flaws. While most of these innovative projects are still in their infancy, the blockchain community should keep a watchful eye on their progress.