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Michael J. Casey is the chairman of CoinDesk's advisory board and a senior advisor for blockchain research at MIT's Digital Currency Initiative.
The following article originated in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday, exclusively to our subscribers.
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A gloomy look at the state of cryptoland two weeks ago, it's time for more than a full assessment of the outlook.
Is we have been hearing, is a competitive price and is not so tight. The question, then, is there are any serious projects for developers to work on?
The answer, resoundingly, is yes.
The big challenge for blockchain development is scaling: how to resolve the tradeoff between decentralization and efficiency that is bitcoin and ethereum into the ever-growing string of transactions.
Overwhelming security and overly trusting specific record-keeping entities, is vital because it will pave the way for other improvements, including lower costs, more application-layer software products, and improved user experience.
The good news is that there's a great deal of work going on. A new experience in the capacity of open, permissionless platforms.
Layer one and layer two
Much of the focus has been going to be bitcoin and ethereum developers to resolve this challenge.
In bitcoin's case, it was the subject of an ugly dispute between those favoring a block-size increase – an on-chain "Layer One" solution backed by advocates of breakaway cryptocurrency bitcoin cash – and those, as the Bitcoin Core developers, who preferred off-chain "Layer Two" solutions such as the Lightning Network payment channels model.
As the block size increase solution at bitcoin cash deteriorated into an ugly battle among proponents, Lightning has shown significantly more progress. According to 1ml.com, the Lightning mainnet now counts more than 4.00 nodes and more than 13.500 payment channels, with those two metrics having increased by 10.45% and 43.5%, respectively, over the course of the same month. Just as the bitcoin price collapsed, work just continued building the network.
The ethereum community has been more cohesive than bitcoin's, but it has also been embraced a more ambitious agenda. The scaling roadmap includes a shift to proof-of-stake consensus under the Casper project, as well as etherence
The focus is on sharding, which splits the blockchain into different, interlinked portions, so that the processing requirements for each node can be lessened. Lightning-like state channels as the Raiden Network and the "child chain" model on which Plasma is based.
The complexity of these changes, especially the on-chain protocol adjustments, require coordination among ethereum's relatively large user and developer base, has meant that the target has been pushed back Repeatedly. However, a new plan aims to accelerate the introduction of the changes.
In any case, the wider blockchain community should be thankful to ethereum for the enormous amount of thought and planning that has gone into these ambitious solutions. The Github repo for ethereum sharding work, for example, now stands as a resource for all work on this promising solution.
Standing on the shoulders of giants
These communities have been working on these solutions, they have been able to build on their own ideas and launch new projects.
There is still a lot of catching up – both in terms of network size and developer engagement. As CoinDesk's newly created Crypto Economics Explorer, or CEX, shows, bitcoins and ethereum are well ahead of all other blockchains on both those metrics.
Mania. Some of these projects have been similar to the radar. In other cases, raising decent money – if more quietly than others.
Take Algorand. The proof-of-stake blockchain, built by Turing Award-winning MIT computer scientist Silvio Micali, uses a randomly selected system for validating blocks that saves on computing power and aspires to achieve a massive three million confirmed transactions per second serving 4 billion users – capacity that's many, many orders of magnitude greater than both bitcoins and ethereum.
In October, the Algorand team raised $ 62 million from what is described as a "broad global investment group" representing the venture capital, cryptocurrency and financial services communities. developers working on top of the Algorand platform.
Then there's Devvio, which is targeting the Digital Money Forum at the Consumer Electronics Show in Las Vegas in January.
Founded in Albuquerque by robotics pioneer Tom Anderson, Devvio has filed a number of patents for a project that took the form of an idea for the creation of an identity and custody solution. Devvio claims to have achieved a whopping 8 million transactions per second as a benchmark result in testing its platform. Notes: These claims are to be subjected to the full extent of the peer review and deviation.
Another under-discussion permissionless blockchain is that of Nexus Earth, whose multi-layered consensus process, known as Tritium, is designed to increase throughput by giving more of the tasks involved.
Nexus says that a recent test by founder and chief architect Colin Cantrell achieved throughput of almost 200,000 data requests per second and transactions of more than 4,000 per second.
While Nexus' transaction processing claims are much better than those of Algorand and Devvio, they are well above those of bitcoin and ethereum, which handle seven and 15 transactions per second, respectively, and four times that of Ripple at 1,500 per second.
Importantly, Nexus is also tackling a secondary problem of network scaling. Via the involvement of the former Cisco senior engineer Dino Farinacci, it is integrating the Locator / ID Separation Protocol, or LISP, which allows for identity interoperability across devices. This could engage Nexus in solutions aimed at bringing blockchain-based security to decentralized Internet of Things networks.
Cash-up ICO recipients
Other, higher-profile projects are also hard at work developing large-scale blockchain solutions.
IOS, led by block.one, attracted some of the 21 block producers caused tension in the community, but its record-breaking ICO, which raised $ 4 billion, has left with a massive war chest with which to advance the protocol and fund application development. CoinDesk's CEX shows a large network and developer pool working on EOS.
Cardano, led by early ethereum founder Charles Hoskinson, is now developing a variety of scaling solutions. Cardano has managed to spur a significant academic interest in its platform, part of an aggressive research and development fund led by the holding company, IOHK.
Beyond these specific blockchain platforms, solutions aimed at cross-asset interoperability are also pushing ahead with development, posing an alternative vision for achieving scalability across different blockchains. These include Polkadot, led by another ethereum founder, Gavin Wood.
As the collapse in crypto prices was not good news for ICO-funded projects such as Cardano, Polkadot and EOS, research by BitMEX showed that many of them remain well-capitalized because they managed their treasuries proactively following the big fundraises of last year. These long-term projects will not be able to give rise to a set of securities regulations.
It's a game to try to predict which of these solutions will happen and which will fail. Scaling and usability.
From the death of crypto, we may be entering its most exciting phase.
Construct 2017 image via CoinDesk archives.
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