Limitations of the Blockchain: The Path Forward

350+ Billion USD is the current market cap of the crypto industry. The technology driving this massive inflow of wealth is The Blockchain. With such a massive amount invested, its important to understand the underlying technology. To understand a technology, it is important to understand where and how it excels, but more importantly: where it fails.

So, what is the Blockchain?

The simplest way to picture the blockchain is to imagine a decentralized spreadsheet. A spreadsheet which is replicated countless times across different computers within a network. Hundreds, thousands and potentially millions of people have access to this public spreadsheet. Referred to as the ledger in technical terms, this special data store - records transaction details which occur within the network. Each transaction on the network is updated onto every ledger copy in a synchronous way. Having no central storage repository, blockchain technology is symbolizing a shift in power from the center to the edges of a network.

Ethereum creator Vitalik Buterin said--

Whereas most technologies tend to automate workers on the periphery doing menial tasks. Blockchain automates away the centre. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.

Blockchain is a secure distributed electronic ledger, which connects multiple parties belonging to a network of trust and integrity, facilitating the transfer of assets and the information pertaining to those assets.

Limitations of current Blockchain:

Every technology has its own pitfalls. This is also true in the case of Blockchain. Let's take Bitcoin as an example. The number of transactions it undergoes per day have skyrocketed. From an average of five thousand in 2009 to a whopping ten million in 2017. The exponential increase in the number of transactions has unearthed certain scalability issues. On an average Bitcoin is able to process only 7 transactions per second. This rate of transaction is almost 250 times lesser than what Visa can process in the same amount of time. Meanwhile, Ethereum has moved one step ahead of Bitcoin. Ethereum’s average is of 20 transactions per second. The state of the art has progressed by leaps and bounds. Current industry standards range anywhere between 190 and 1700 transactions per second.

One of the core features of any blockchain is: immutability. All data written onto the blockchain can never be deleted. This results in a continual increase size of the ledger which must be replicated across all nodes. The recent boom in the use of this technology has led to the formation of multiple Decentralized Applications (Dapps). Dapps are applications that run on a P2P network of computers rather than on a single computer. When these Dapps put their data on the blockchain, the size of the ledger increases. For Dapps with a high volume of data, on chain storage results in very large ledger sizes.

As more and more Dapps spawn the volume of data entering the blockchain environment is greatly increasing. As it stands now, the Ethereum blockchain has reached a size of 130GB within its two years of service. With the exponential increase in size, regular nodes may not be able to cope and might leave the network. With time only large organizations being capable of accommodating the blockchain ledgers. Under such conditions the network will eventually succumb to a monopoly. This will eventually lead to re-centralization and take us back to square one.

Many Companies are coming up with their own versions of the blockchain. One particular solution by Dispatch Labs is the Dispatch Blockchain. The Dispatch Blockchain uses on-chain smart contracts to facilitate off-chain data storage. The Dispatch Blockchain off-loads the scalability bottleneck to a sustainable alternative. This helps businesses shift to a blockchain based system with no hindrance to speed and functionality.

What is off-chain and on-chain storage?

Information that is part of any blockchain ledger is considered as on-chain information. This may include smart contracts, transaction details or any other format of data. As mentioned before, data once added to the blockchain usually stays there forever. Efforts are being made to reduce blockchain ledger size. Using the concept State Tree Pruning the size reduction is considerable. In-vain, this size reduction is still not enough to support real world Dapp data.

The logical solution is off-chain storage. In off-chain storage, data relevant to elements in the blockchain is not actually stored on the blockchain itself. Clubbed with strategically structured smart contracts and robust security protocols, it provides a solution to Dapps looking to work with larger quantities of data.

Dispatch also provides an artifact based private network called, Dispatch Artifact Network(DAN). The DAN furthers the functionality aspects of the blockchain. This helps with longevity and future scalability issues.

What is an artifact?

In this specialized Dispatch Artifact Network, an artifact is any format of data which is stored off-chain within the network. In the current industry, storing data off-chain is becoming of paramount importance. With data sets increasing in size, ledgers are struggling to keep up. However, with DAN a linear rate of growth for shared ledgers is possible. This provides an exponential rate of growth for actual data.

Artifacts are being deployed to the DAN from a specialized virtual machine called The Dispatch virtual machine (DVM). The DVM is a virtual machine based on the existing Ethereum Virtual Machine(EVM). The major difference is that the DVM supports artifact based operations as well. These artifact based operations allow execution of real world business logic on-chain.

So, What does all this amount to?

In a nutshell, protocols like that of Dispatch Labs are enabling businesses to shift to a blockchain based environment with ease. Previously, if a business application was dependent on large data sets, it wouldn't be able to shift to a decentralized system. With the advent of off-chain storage coupled with a secure on-chain smart contract protocol, the Dispatch Blockchain enables even the most data intensive enterprise applications to be implemented at scale.

Blockchain technology is still developing. Even so, its impact is already profound. In the world of business - utility trumps novelty. With the resolution of teething issues in early blockchain protocols, the future of blockchain in enterprise technology looks bright and promising.