As the hype around blockchain’s impact builds, so does the credibility of innovators who are moving into the space. Thousands of projects are in the works to ensure the technology is set up to be the secure and safe decentralized system that will change how we share and hold assets and information across the globe.
Blockchain creates a distributed ledger that facilitates direct, secure transactions between two entities without requiring a third party. However, there have been several complexities that have stalled the technology’s use by the masses: decentralization, scalability and security. This has been dubbed the blockchain “trilemma” by Vitalik Buterin, the co-founder of Ethereum — one of the most popular blockchains that many people, myself included, currently hold.
Let’s take a deeper look at these three barriers.
• Decentralization: This is the basis of blockchain, which allows for a non-centralized custodian ecosystem.
• Scalability: The ability to have fast, mass transactions. Current blockchains can only handle between 7-15 transactions per second, whereas Visa claims it can handle up to 24,000 per second.
• Security: The immunity of a blockchain and its resistance to attacks.
All these problems are relevant to anyone entering the blockchain space. Whether you are building a decentralized application on your own or building your version of the technology, not only will the “trilemma” still exist, but you will be in the same boat as others trying to find experienced engineers or developers to fix them.
To solve these problems plaguing mass adoption, more attention is being drawn to what are called “layer 2 solutions.” These are essentially protocols built on top of a blockchain to increase the functionality of blockchain without compromising security and decentralization.
My organization, among other companies, is looking to create solutions to these problems, as well as other problems that many experts in the industry are not focusing on enough. As someone who has been in the tech industry, and in the developers’ seat before, and is now working with some of the best in the blockchain industry to build our layer 2 operating system, many issues with blockchain development have become clearer to me.
Taking a step back, why does blockchain need to be scalable? Nobody is using it. We’ve had one app that has challenged the limits of Ethereum, CryptoKitties, and that was short lived. I’m not saying that blockchain doesn’t have to be scalable eventually, but until we see mass adoption, it doesn’t matter. Even when all the technical problems of blockchain are solved, it won’t mean anything unless people can use it without the possibility of losing hundreds of millions of dollars. The reality is that developing on blockchain is and still will be difficult and could even be more difficult with the addition of layer 2.
Why? Because most layer 2 solutions, although addressing the three aforementioned problems, will not touch on the bigger picture of the blockchain problem for future expansion: the lack of skill by the average developer. So, this adds a fourth dilemma to the list:
• Ease of development: Removing the low-level building and moving of infrastructure that the average developer spends too much time on, rather than building features for the application to work on top of the blockchain.
At this point, to truly take advantage of the tech, you need a team with the equivalent of multiple doctorates who have backgrounds in network security, cryptography, blockchain, distributed systems, etc.
What can happen when developers without blockchain experience build on top of this technology? In 2016, DAO lost $60 million ether in an attack after a hacker found a loophole in its smart contract code. In January 2018, hackers stole $530 million worth of NEM cryptocurrency from Japanese exchange Coincheck. In November, a user of Ethereum wallet Parity discovered a bug that turned multi-signature wallets into a regular wallet address. In a panic to return the money, the user inadvertently made the wallets unusable and destroyed $150 million.
As mentioned above, even if the first three problems are solved, ease of development is the real key to mass usage. We need more focus from the blockchain community on ease of development — not just temporary bandaids, but long-term solutions.
Imagine a driver having to build their own car before they could get on the road. This is currently where blockchain is when it comes to application development. What will inevitably save many resources, including time, money and personnel, is ready-to-go, interoperable protocols for blockchain applications that take away the hard parts of development. Providing these lower level builds will make expansion into blockchain for any new company looking to incorporate the technology easier by offering the ability to have a solid foundation for their applications from the start.
This will be what truly makes blockchain adoptable and innovation endless.
Author:Christopher Swenor, CEO of LegiLogic, which created Alacris, a layer 2 operating system for the blockchain that focuses on increasing adoption