Five Scaling Issues Preventing Blockchain DLT From Going Mainstream

Etheremon is a platform that is housed on the Ethereum blockchain. Users can interact with what are called Ether creatures, in which users can level up and capture other creatures. This application lets users generate Ether and use their Ether credits as part of Etheremon’s in-game currency.

The application has just hit the market, and it has already made quite the commotion among crypto enthusiasts. Like games such as Pokemon, you can catch creatures and put them against each other. At the time of Etheremon’s launch, there were nearly 20,000 trades made on the platform.

However, the introduction of the Ether monsters to the blockchain had wide-ranging consequences. It made transactions slow to a halt, and fees skyrocketed.

Five Major Scaling Issues Preventing Blockchain DLT From Going Mainstream

These problems and more are just part of a core of issues that faces new applications from being released to the blockchain. In fact, one could summarize them as being the following: lack of scale, compatibility, privacy, oversight, and regulations.

Scalability

Etheremon and its complementary site Crypto Kitties are standout examples of the issues that face the blockchain today. Many users cried out that their transactions were not going through, or that they had to pay exorbitant fees for transfers.

At the moment, Ethereum can only handle fifteen trades each second.

That network cap is due to change, and developers are actively exploring how they can alleviate this issue for their end users.

One platform that stands to change the way that transactions are processed is the Raiden Network. This will let future initial coin offerings to operate at much faster rates.

However, some users said that the development of decentralized applications may not come fast enough to encourage widespread adoption.

The CEO of the messaging application Kik, Ted Livingston, rejected plans for launching their ICO on the Ethereum blockchain. He even went as far to describe Ethereum as being a primitive form of cryptocurrency that quickly needs to change.

One promising development to Ethereum is with its planned technology release known as sharding. Sharding would let users fractionate the network into smaller components that would be called shards. This process could, in theory, boost transaction speeds, although we may need to wait as long as 30 years to see it happen.

On the other hand, there is still some hope for those who would like to see faster transaction speeds. One company called Zilliqa, a project based in Singapore, is experimenting with the sharding technique. The project has been successful hitting more than 2,400 trades per second, with plans to raise that number to more than 40,000.

Compatibility

As of right now, there are nearly 1,400 different coins available for purchase. There will only be more coins in future, so the need for the blockchains to communicate with each other is greatly increased.

There are numerous blockchains for customers to choose from, each with compatibility as being the key issue that prevents their widespread adoption. Some of these blockchains include ICON, AION, and WanChain, each of which demanded a stronger adoption curve, so they formed the Interoperability Alliance. This group will put the focus back on connecting the blockchain to different protocols.

• ICON has the goal of making each blockchain independent from each other, without the use of middlemen or go-betweens. ICON has support by some major South Korean institutions, including banks, hospitals, and insurers.
• AION has drawn up a deal with a defense contractor called Moog, and intends to be a catch-all protocol that all blockchain systems can use.
• The Wanchain project aims to be a decentralized platform that encourages the use of smart contracts across different currencies. The brand has roots in major Chinese businesses.

Other important blockchains include COSMOS and Polkadot, both of which are due to be released over the next few years.

Privacy

The way that the blockchain works means that everyone can everyone else’s transactions. The transparent nature of the blockchain is great for some applications, but not for others.

For this reason, startups such as NuCypher intends to provide customers with the option to send and receive encrypted communications between interested parties. It plans to integrate itself with major platforms and networks, which could then enable businesses to prevent data leaks and share sensitive information via the blockchain.

Regulations

Regulations for the crypto industry is critical right now. The landscape could be loosely described a chaotic, and has opened up an influx of scams and cyber criminals running off with people’s hard earned money.

In order for startups to enhance their transparency and legitimacy, it’s important that one’s tokens comply with the rules set out by the SEC. Some services such as Polymath and Tzero help facilitate these transactions within the appropriate guidelines.

Governance

The different forks in Bitcoin has stirred up contentention in the cryptoverse. Users had anticipated a growth to Bitcoin technology, only to be met with disappointment. One major failing it to update the block size to accept 2MB worth of data, put that development has been put on hold.

Startups frequently make mistakes when it comes to oversight and governance, but leaders today are now taking more careful steps. One platform called Cypherium is taking a different angle to governance, and has established its oversight working on multiple levels.

Cypherium allows for a democratic process that includes voting on the proposed block dimensions and size, as well as transaction prices. Other innovations such as Decred allows users to vote using tokens on its blockchain.