I start this series just to express my opinions about what crypto may evolve in 2022. Maybe it will not but my hope is they can do better.
With more and more users joining the crypto universe, scalability is a challenge for Layer 1 platforms such as Ethereum and many others. Scalability was a problem that had been identified in 2015. However, blockchain technology was not able to resolve and the issue has been persistent on many platforms.
There is no single solution to the scalability problem in blockchain technology. 2022 will be another year of continually seeking and researching the optimal solutions for future blockchain usage.
Here is a 1 min summary of the article if you want to skip the reading.
Blockchain provides an ecosystem for users to interact. Unlike the Internet of Things (IoT) which users share their data with each other, blockchain provides an additional layer of verification for each data to be validated and broadcast to the public. Scalability in blockchain then becomes more costly and slow processes.
Challenge of Scalability
Cost is one of the challenges each blockchain will be faced. To be able to validate each block of information, you require either more validators to work in a more efficient way (or input more energy) so that each data can be processed. The more data to be processed, the costly each validation process and the longer time it will take to process each data.
Solutions of Scalability
One of the currently existing solutions is the Proof of Stake consensus algorithm. With additional two features Tower BFT (Byzantine Fault Tolerant consensus) and Proof of History from Solana, the blockchain resolve scalability issues temporarily. Both features are technology to determine honest members or nodes in a short time and dedicate them to process validation a guaranteed way to agree on the timing and order of a set of transactions. Such a consensus algorithm is also being used in Hedera, a project that completely opposes Proof of Work. However, Solana has sacrificed its decentralization feature to reach scalability optimization.
There is a trilemma on the blockchain that will continue debating along with the progress of the development. Scalability, security, and decentralization. One can not be solely optimized without sacrificing the other two.
If you sacrifice decentralization to become centralization, then you have scalability and security. Think about credit companies like Visa who control all user’s data as securely as possible and transact payment at lightning speed.
If you sacrifice scalability, you have security and decentralization like Bitcoin. Bitcoin is the most secure cryptocurrency and it is decentralized with many participants working together to improve. But when Bitcoin starts pursuit scalability through Lightning Network, it has to sacrifice its security and only broadcast output of the final transaction while keeping all other intermedia transactions in the black box. It is prone to have security issues during intermedia transactions that no one may be able to discover until later.
If you sacrifice security, then you got scalability and decentralization like Defi projects Uniswap. Then your bank account is open to every hacker to try to test their ability to breach into and eventually lost millions of dollars investors contribute.
2022 Is Scalability Testing Year
Scalability is an ongoing problem in blockchain and many researchers will continue working on it. Ethereum is slowly phasing out Proof of Work into Proof of Stake and many layer 1 solutions that resolve scalability problem has already been implemented by Proof Stake such as Solana. There will have a better way to resolve scalability issues. However, we shall see how others play out.
Scalability is a problem but it is also an opportunity to introduce better layer 1 solutions. Every competition can help another platform to evolve and become a better version of the cryptocurrency for everyone to participate in.
Stay tuned for the 2022 Prediction #2: L2 Bridges
This article is also published in Cryptologist as parnership publication.
Photo by Robert V. Ruggiero on Unsplash
Note: the post was shared on multiple platforms here.
You can refer my previous article lists here
Digital Commodities- the Unlimited Resources of Commodities Has Born
Universal Income in Crypto Way
DeFi 1.0 is Officially Dead - Welcome to DeFi 2.0
NFT Has a New Purpose
How Many Ads Are Too Much - Floki Inu Ads Got Backfire
Metaverse - Second Life Era
Bitcoin ATM Adoption and Its Potential Security Vulnerabilities
When Corporations Are Running By Everyone
The Fundamental Value Is Irrelevant
Coinbase At Huge Reputation Crisis
CBDCs' Flaw Design
Regulations Start Hitting Crypto Exchanges
From Bitcoin Standard To Zero-Knowledge Proofs - Decentralization 2.0
Shiba Hits 1 Million Users (Army) Milestone: What is Next?
How To Avoid Crypto Scammers
Shiba Game - When Meme Meets Metaverse
Twitter CEO Steps Down - A Full-Time Bitcoiner
Change of Macroeconomy Landscape
CBDC Is Losing The Game
Doge The Future
El Salvador's Bitcoin
Market Sentiment Has Changed
Brief History of Ethereum and How Ethereum 2.0 May Over Promise
Crypto Is Getting Real
Who Cares If Craig Wright Is The Real Satoshi
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What Happened In BadgerDao
A Proposal To Move Bitcoin Mining PoW Away
IMF Keep Crying Out, Crypto Adoption Keep Accelerating
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Defi Enters To Crypto Bond Phase
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IMF Did Have A Plan to Run Global Regulations
Doge Starts Moving
A New Malware Will Steal From Telegram
Smart Money Is Out, Institutional Money Is In
Wait, Web3 or Web 3.0 or web3
Airdrop?! Not So Lucky Anymore!
Disclosure: The article was written by a delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matters. You should not believe any words this author wrote or you may experience similar symptoms or even possibly become a nut job.