In late 2019, research firm Forrester and Ernst & Young, or EY, published a report reflecting the companies’ reliance on public blockchain. The results show that 75% of respondents are likely to use the public blockchain in the future.
While this was the case, the report also found that most companies still use private blockchains for security, privacy, and scalability. The survey also mentioned that the top three concerns about public blockchain networks are lack of maturity, security and privacy concerns.
Fast forward to 2021 – these concerns remain. Meanwhile, advanced solutions are being implemented to combat these problems for companies considering public blockchain networks.
For example, one of the most important developments to enable public blockchain use is known as solutions at scale. Although interworking is not a new concept, many solutions are currently being developed for scaling from one level to another to meet the requirements of the enterprise.
Tas Dines, Ethereum Enterprise Ecosystem Support and Chair of the Enterprise Ethereum Alliance Mainnet Working Group, told Cointelegraph that the level-to-scale scaling solutions primarily aim to address transaction flow constraints for decentralized blockchains in Tier 1 networks:
“Instead of executing all of your transactions directly on the blockchain, you can work on top of a Layer 2 instance that can handle many transactions per second at a much lower transaction cost. But most importantly, Level 2 is protected from Level 1, so you can still have many From the same security coverage that the underlying blockchain provides. ”
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According to Dines, the most noticeable advantage of a second-level solution is that the software running on the network is no longer subject to the constraints of basic blockchain flow. This is very important because the Ethereum blockchain has been criticized over time for its ability to process very few transactions per second.
This decision was also commented on by Anna Frankovskaya, commercial head of the Aventus Network – a cross-chain protocol for Ethereum transactions – who told Cointelegraph that Ethereum’s current transfer rate of 15 transactions per second is insufficient. By comparison, she said, “the Visa network alone processes about 17,000 transactions per second.”
With the solutions of the two groups, Dines explained, companies now have the best of both worlds thanks to “high bandwidth and lower transaction costs, as well as strong security of the public network and the ability to deal with other applications based on it.” Notice. This is a step up from the companies’ previous use of private blockchain networks thanks to semi-centralized chains that are able to process more transactions per second than fully decentralized public chains.
Dines also mentioned that second-order solutions can also help solve other problems companies face with general bans. For example, one of the biggest challenges that organizations face when it comes to using the public blockchain network is privacy. In fact, 50% of survey respondents in the EY and Forrester 2019 report cited privacy as their top concern.
Dienes noted that specific multi-level technologies have been developed to address this problem, adding that companies can now deploy a private multi-level interface that keeps sensitive information away from Tier 1 networks. This increases confidentiality and also preserves some of the interoperability and security benefits of the multi-layer network. He also noted that this, along with the awareness of zero-based knowledge, is more effective for companies using second-order solutions on public networks such as Ethereum, which has become a popular platform for commercial use.
When it comes to security, second-tier solutions can solve business problems such as locating data, which is another major challenge for companies considering generic blockchains. For example, Dines commented that companies that store data at a specific location for regulatory compliance purposes may use server-to-server communications in the known location of a known device.