Speaking at a blockchain conference that took place in January of 2019 in San Fransisco, Vitalik Buterin, the co-founder of Ethereum, and one of the most well-known and influential people in the crypto space gave his opinion on blockchain projects claiming thousands of transactions per second, naming them “Centralized Piles of Trash”.
Ethereum Co-founder on Blockchain Consensus Algorithms
When one member from the audience asked a question about the upcoming technology – CBC Casper and its impact on the scalability of the Ethereum blockchain- Buterin intervened and said:
“So I’ve noticed a lot of misconceptions here. Because, like, there’s a lot of like, honestly, bad crypto projects that try to claim. Oh, because we use fancy BFT, we can do 5,000 transactions per second and proof-of-work can only do 15.’”
Moving forward, Vitalik clarified that consensus algorithms’ main focus is the security of the protocol and not scalability.
He continued by saying:
“There’s a lot of horrible misconceptions inside that. Because the purpose of a consensus algorithm is not to make a blockchain fast. The purpose of a consensus algorithm is to keep a blockchain safe. With the way proof-of-work works, it becomes unsafe if computers spend more than maybe 10% of the time actually mining and verifying blocks. Bitcoin-NG or things like the various forms of proof-of-stake, it could potentially be safe if you go higher than 10%. But the difference is still very small.”
Vitalik Buterin Criticizes Competitors that Claim to Have Solved Blockchain Scaling Challenges
“When a blockchain project claims ‘We can do 3,500 TPS because we have a different algorithm,’ what we really mean is ‘We are a centralized pile of trash because we only have 7 nodes running the entire thing.’”
Buterin emphasizes, that projects which declare that they have found the solution to blockchain scalability hurdles are centralized, and that defeats the whole purpose of blockchains and decentralization.
Many could agree on the fact that the main merit of this revolutionary technology is decentralization, taking the power and influence away from the top 0.1 percent and giving everyone the same tools and opportunities to succeed in life.
Many cryptocurrency investors aren’t concerned about the technology behind the tokens they are investing in; that might be because this space is still in its infancy. Most people care more about the money they can gain from their investments, rather than the problems those projects can solve.
But surely there are some people captivated by the capabilities of this new emerging technology, that can transform society from the ground up for the better.
Vitalik Buterin Offers His Solutions for Blockchain Scalability
It would be quite hypocritical to judge your competitors and not to offer some solutions of your own. So Buterin once again shared his ideas on solving these scalability issues.
“There are good ways to make a blockchain fast, and I would argue that the main good candidates are basically layer 1 scalability [solutions] through sharding and layer 2 scalability solutions through things like channels, plasma, lighting networks and [zk-SNARKs]”
Sharding is one of the most well know and anticipated solutions for Ethereum, and blockchains in general. Sharding is basically dividing the blockchain among people running the network (nodes) so that each node has a fraction of the blockchain instead of the entire ledger. This would spread the data load and make them more efficient and scalable.
Payment channels is an off-chain solution for blockchain scalability, that can run parallel to the main blockchain. (Lightning network for Bitcoin and Raiden for Ethereum). Using smart contracts two or more users can exchange transactions between each other as many times as they want, and only once they close the payment channel the final balances are mined and included to the main chain. That’s why the main chain doesn’t need to be burdened with every transaction.
Plasma is the name of Ethereum’s sidechain solution for scalability. Ethereum sidechains are also called ‘child’ chains which can be connected to the main chain and take some load off of it so that the main chain won’t clog.
Zk-SNARKs is a method of cryptography, part of which allows large amounts of information to be compressed, and proofs created that that information is there without actually needing to see it or have it. This concept could drastically improve blockchain data storage.
As you can see there are many great techniques and ideas being developed for solving blockchain scalability issues that can still maintain a decent level of decentralization. The future will show us what results these concepts can achieve, and for now, keep in mind that TPS numbers aren’t the most important metric describing a blockchain project.
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