There has been a lot of talk about how blockchain opens up unlimited opportunities for companies. And while all the hype has not fully yielded concrete results, the explosive growth of decentralized finance and the non-perishable token (NFT) market has shown signs of what can be achieved and how blockchain can truly impact even the most conservative industries.
So, unlike two to four years ago, developers, entrepreneurs and companies are not just blindly joining the bandwagon. It’s not about what blockchain can do anymore. The questions now are about how to best use technology for the best results. Thus, blockchain has gradually evolved from a buzzword to an acceptable technology. If this does not mean real growth and development, what does it mean?
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However, this does not mean that he moves smoothly so far. Ever since we began to see blockchain as a viable technology to support common applications, the throughput effect of blocks, especially the widespread ones, has been the subject of thorough scrutiny. It is clear that scalability remains a criterion for assessing the readiness of blockchain networks to accept enterprise applications.
Using Ethereum as an example, it is safe to say that many Ethereum users have directly encountered the shortcomings of the non-scalable blockchain infrastructure. In my experience, high transaction fees due to network downtime are a potential rejection factor for private investors. For the average user, there is no way to justify paying a commission of up to $ 70 per transaction, which may not even be $ 100.
In particular, Ethereum’s inability to scale appropriately has somewhat stifled the creation of the Defi and NFT sectors, as retail investors and traders interested in conducting low-value transactions are often forced to look from the outside. Even Vitalik Buterin recently acknowledged the seriousness of this situation and pointed out that the current system of scaling and fees is unsustainable if the goal is for NFT-based social media projects to flourish on the Ethereum network.
So the question is, how have blockchain developers responded to this recurring issue?
Is the first team enough?
I think the ultimate goal is to solve the blockchain trilogy, which is about finding a balance between decentralization, security and scalability. Blockchain often has to sacrifice one of these three features. Most old blocks, including Bitcoin and Ethereum, sacrifice scalability for security and decentralization in infrastructure design.
It should be said that Bitcoin and Ethereum are the two most popular blockchain types, not only because they are the first of their kind, but also because they have proven to be the most decentralized and secure blockchain network. Basically, what they lack in scalability, they make up for other core blockchain requirements. Although this was sufficient in the early years, the influx of blockchain applications has certainly put enormous pressure on tier 1 chains to develop and integrate scalability-oriented infrastructures.
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Although it is much easier for new blockchains to adapt accordingly by implementing scalable infrastructure from the start, it is much more difficult for those with existing infrastructure to do the same. As can be seen in the example of Ethereum, this may require a complete overhaul of the existing infrastructure. Moving the existing multi-billion dollar blockchain economy to a new blockchain infrastructure involves many risks. A lot can go wrong, especially since this has not been done on such a scale before.
Therefore, the obvious choice for DApp developers and users is usually to choose concentrated, scalable level 1 streams. The list of Tier 1 chain solutions that are trying to take advantage of the increase in demand for fast blockchain infrastructure is expected to grow over the years, especially Binance Smart Chain. Tron and EOS. But as we have found, decentralization is not the strongest of these alternatives. In the face of the aforementioned blockchain trio, most Ethereum and Bitcoin speed options have decidedly decentralized. So it becomes a matter of preference, and developers are willing to compromise.
Perhaps the third and most practical option is to look for second-level solutions. With this, developers can at least ensure that they have access to all the pieces needed to create optimal blockchain applications.