With an array of blockchain projects in development, it might get cumbersome at times to keep a track of each and every one of them. The mainstream is aware of the giants such as Bitcoin, Ethereum, and Ripple to some extent, but the deeper you dive into the ocean of projects in the cryptoverse, the darker it gets.
For all its promising features, one of the major issues facing blockchain technology is its lack of scalability. Distributed ledger technology (DLT) dwarfs in transactions processed per second when compared to long-established payment processing networks like Mastercard and VISA.
Although there have been instances of blockchain showing impressive results at times, the majority of such success cases use private blockchains which have a high degree of centralization – defeating the very purpose of a decentralized blockchain network.
Is Ethereum Falling Behind?
Smart contracts platform Ethereum (ETH) has come a long way since its inception on July 30, 2015. The open-source, public, blockchain-based computing platform reached its all-time high valuation of $1389/ETH with the total market cap in excess of $134 billion in January 2018. Ethereum was, and to some degree still is regarded as one of the leaders in the game that will orchestrate the ‘smart contract revolution’.
However, fast forward to February 2019, the value of ETH today languishes somewhere close to $100 with the market cap slightly above the $11 billion mark.
A prime culprit for this dramatic downfall is the issue of scalability. No matter how revolutionizing the idea, unless an enterprise can offer a sustainable product or service to the market, chances are grim that it will see the light of mainstream adoption and this seems to be happening to Ethereum.
Crypto is no longer the exclusive topic of discussion among programmers in closed rooms; an increasing number of institutional investors have shown their interest in adopting the technology. Needless to say, increased interest has also raised the bar in the industry leading to the birth of a number of competitors which include the likes of TRON (TRX), EOS, and many others.
Ethereum’s recent Constantinople hard fork didn’t help the project’s goodwill either. Scheduled to go live on January 16, 2019, the highly anticipated hard fork was postponed after smart contract audit firm ChainSecurity found the network vulnerable to reentrancy attacks.
With mounting pressure from competitors, Ethereum is forced to tread the waters cautiously.
Polkadot came into the news recently when reports emerged detailing how the interoperability blockchain platform is looking to raise $60 million in a pessimistic crypto market.
To explain Polkadot, one would need to understand the need for interoperability chains.
Bitcoin operates on one blockchain network. Hence, all the transactions related to BTC are added on to that particular blockchain in the form of new blocks which contain the transaction data and other pertinent specific details. However, if the world is to see a blockchain revolution, it would certainly need more than one blockchain. This is where Polkadot comes in.
Polkadot aims to be the communication bridge between different utility blockchains. In the firm’s own words:
“Polkadot is a network that connects blockchains.”
Yes, interoperability blockchain solutions are not something entirely new on the block. However, only a handful of them can claim to have a detailed and clear roadmap in front of them like Polkadot.
Polkadot’s primary goal is to create interoperability between different chains. The DLT-based platform enables dApps and smart contracts on one blockchain to transact data and assets from other blockchains without any hindrance.
In order to facilitate seamless transactions between different chains, Polkadot uses their innovative scalability solution called parachain.
Polkadot’s Modus Operandi
Think of the Polkadot network as a puzzle of three pieces – namely, parachains, which collect and process data; relay chains, which transmit processed data to other chains; and bridges, which relay the data back to the main chain, such as Ethereum.
The benefit derived out of this three-step process is that it frees the main chain from excessive data load. Data from the main chain is transmitted into the Polkadot network, which then runs incoming data through the three stages and then relays abbreviated information back to the main chain.
According to research done by the team at Polkadot, linearly processed transactions can only reach transaction volumes as high as 1000 tx/s. However, if data is flowed through para chains and sent back to the main chain via bridge, this figure could rise exponentially.
Testing Times for Ethereum
Polkadot’s clear and crisp interoperability solutions are a step in the right direction for the evolution of blockchain technology and its adoption en masse. Results have already started flowing in, as Aragon, a decentralized project that aims to empower freedom by creating tools for organizations, announced on January 29, 2019, that they are contemplating launching their own blockchain on Polkadot network.
Jorge Izquierdo, the co-founder of Aragon, tweeted on January 26, 2019, that he believes Polkadot is “being underestimated” as an ETH competitor. He also lauded the pace of development of enterprise-grade solutions in the Polkadot system.
Of course, there’s nothing outrageously concerning for the Ethereum community regarding Aragon’s decision to launch their network on Polkadot. It’s not that the firm has abandoned its entire operations on the Ethereum blockchain.
But, however, it cannot be denied that 2019 could prove to be a watershed year for virtually all the projects in the cryptoverse, including Ethereum. The competition will be fierce because a fancy whitepaper can no longer make the cut. Funds have to be earned with working products and services contrary to the golden days of initial coin offerings (ICOs).
Perhaps this could prove to be healthy for the cryptoverse in the long-run as the bear market weeds out the entirety of speculators and illegitimate projects from the industry, leaving only the ideas which can leverage blockchain technology to its fullest potential and usher in the new dawning of a new technological revolution.