The blockchain is fundamentally a distributed ledger technology, a method to securely and conveniently store transactions. Various industries, from medieval records archival to smart contracts, are beginning to experiment with the real potential of this technology. However, due to its scalability problem in most of its present forms such as the blockchain, it fails to handle vast amounts of transactions that companies such as Visa process daily.
Can the technology be scaled for more meaningful solutions?
Bodhi founder Xiahong Lin will say yes as other businesses are already developing scalable blockchain solutions. He used the Lightning Network as an example. The Lightning Network processes transactions on the blockchain but merely utilizes it to enforce a smart contract. Meaning, the blockchain functions as a judge to enforce the terms of a deal.
Aside from being a more affordable solution, the technology would be hugely beneficial to a broad solution according to TEND founder and CEO Marco Abele. He said in an interview:
“Some fundamental components of distributed digital ledger technology are definitely applicable to bigger solutions and therefore extremely relevant to scalability. DLT is comparatively cheap, it’s efficient and, importantly, very secure whilst removing the need either for an intermediary or for a central authority. The key qualities of this network are that it is fully transparent (anyone can see the ledger’s history of transactions), it is time-stamped and therefore auditable, it is decentralized (the ledger exists on multiple computers), and it is secured through cryptography.”
Although the blockchain can be scaled for larger solutions, it is an entirely different story how to reach this goal. Gibraltar Stock Exchange founder and CEO Nick Cowan said in an interview:
“The harder question is ‘how.’ There’s a lot of debate between on and off chain scaling solutions, for example. The other question is ‘when.’ It’s right that consensus takes time. It proves that the technology is still decentralized!”
Cowan also pointed out that there are multiple perpetual problems with the technology including all the talks about its novelty, technical elements, and scary stories which can primarily distract others from its more practical applications.
Lin emphasized that multiple blockchain projects are struggling to get a good infrastructure down to offer excellent products and services.
“Since blockchain is still in very early stages of development, many projects are experiencing challenges with infrastructure, as they have to build much of it from scratch themselves. In addition, the actual user base of distributed ledger technologies is relatively small, which hinders its growth. Regulation of DLT has also been a challenge for both governments and businesses in the space.”
Another major challenge is that the number of blockchain experts is short compared to the growing demand, making it very expensive to develop the technology.
It is essential for people to understand the real practical use of distributed ledger technology. “When we start to see more real, practical applications, perceptions will change. You don’t need to understand much about how Wi-Fi or email works to use it every day. Eventually, it will be the same for blockchain technology, and it will be just as revolutionary,” Cowan explained.
Once individuals see these applications, the community will also witness more prominent organizations working more closely to create scalable solutions that can potentially disrupt several industries.