Blockchain is approaching its thirteenth birthday. It might not be old tech, but it can no longer be regarded as cutting-edge tech either. True, it took a few years for the separation of Bitcoin and blockchain to occur and a couple more for enterprises to take notice. By 2017, however, the applications for blockchain technology within the business world were starting to be worked out.
Fast forward five years, and every enterprise worth its salt have filed some kind of blockchain patent or signed onto a pilot scheme of some kind. And yet wide-scale integration of blockchain into the heart of modern enterprises has yet to materialize. The reasons behind this owe less to ideological and technical concerns.
Make Web3 Like Web2
The greatest impediment to broader business adoption of blockchain is arguably due to a pivotal pillar of the blockchain trilemma. As Vitalik Buterin famously proposed, decentralization, security, and scalability are the three cornerstones of good blockchain design, but it’s only possible to optimize for two of them.
Right now, the latter of these pillars – scalability – is the biggest stumbling block. In a 2018 report, almost half of 200 companies that were working with blockchain claimed scalability was the greatest hurdle they faced. The situation has only gotten marginally better in the years since.
Enterprises are accustomed to everything working on demand through the cloud. Data warehousing; software; AI/ML: you name it, it’s outsourced to specialist tech giants who can deliver the query results almost instantly without burdening the business with the costs of the hardware and software required to generate it. For an industry raised on instant gratification, switching to a blockchain-based infrastructure where transactions take many seconds or even minutes to resolve takes some getting used to.
While there are many benefits that blockchain can deliver in terms of trust minimization and transparency, it’s a hard sell for businesses raised on web2. The answer lies in creating faster, more responsive, and thus scalable web3 networks that provide all of the benefits of blockchain, sugar-coated with the speed that’s expected of the modern enterprise. Achieving this, however, is more than just a technical challenge; it also requires enterprises to branch out and try more radical approaches to distributed networking.
Quick Off the Blocks
There are many solutions to blockchain’s long-running scalability problem, ranging from tackling the issue head-on to skirting it altogether. The head-on approach entails utilizing solutions such as rollups, in which transactions are shunted onto a cheaper sidechain and then returned to the mother network in batches, driving dramatic speed and fee improvements.
The sidechain approach is exemplified in networks such as Boba, an Ethereum layer-2 that promises fees that are 60 times lower than its parent, much greater speed, and a robust security model. Boba Network is currently making overtures to non-blockchain businesses and believes it can corner the market for cheap blockchain solutions that work straight out of the box.
Every DAG Has Its Day
While rollups and sister technologies such as zk-proofs can scale blockchains such as Ethereum, it feels like a lot of work just to access a network that enterprises weren’t even sure they wanted to join in the first place.
The second approach is to try blockchain analogs that provide the same benefits as a blockchain – trust minimization, decentralization, transparency, censorship resistance – but without scalability problems. There aren’t many candidates that meet this description, but one of them, known as a DAG, has its advocates. A Directed Acyclic Graph eschews the linear fashion in which blocks are appended to a chain, favoring a more organic system of interconnected nodes.
One proponent of this approach, COTI, has upgraded its network to a protocol dubbed MultiDAG 2.0. It may sound like a robot sent back through time to save humanity, but COTI’s DAG architecture has been expressly designed for enterprises, fintech especially. It empowers such organizations to build their own payment solutions and digitize any currency, with a TPS of 100,000 rivaling any legacy payment network.
The idea is that businesses can enjoy the good bits of blockchain without all the off-putting stuff: slow transactions, uncertain network fees, and high access costs. It’s possible that even with a broader range of market-ready options, businesses still don’t embrace blockchain en masse. What’s clear, though, is that until the scalability problem has been solved, we won’t know how far the business blockchain narrative has to run.
The technical solutions are out there, and the onus is now on enterprises to step up and put them to the test.
Published at Fri, 02 Sep 2022 08:20:04 +0200