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As Crypto is entering the ground below

On September 26, the Australian National Science Agency (CSIRO), an independent agency of the Australian Federal Government responsible for scientific research, developed a blockchain network called Red Belly with the University of Sydney. They successfully conducted a pilot test on the global cloud infrastructure of Amazon Web Services (AWS), processing over 40,000 transactions per second.

At 40,000 tx / second, Red Belly is able to process information on an immutable network with a capacity that is 6.666 times larger than the Bitcoin network and about 1,600 times larger than the Ethereum blockchain network.

Ethereum vs. Visa

An Ethereum researcher with an online alias CPereez19 calculated that the transaction for Ethereum's second capacity was about 25,346 tx / second, evaluating the block gas limit and the transaction cost of the Ethereum network:

"The limit of the blocking gas [of Ethereum] it is 7,999,992. The transaction costs 21,000 gas (suppose that nothing else is attached). There are about 380 transactions per block. With a blocking time of about 15.03 seconds, as shown by ETH Stats, this gives us about: 25.346 tx / s. "

The 40,000 tx / second capacity of the Red Belly Blockchain exceeded the transaction capacity of the Visa network, which is estimated at 24,000 tx / second. VisaNet, the basic payment network for most global payments by credit card and digital transactions, processes around 150 million transactions on a daily basis.

Although Visa's transaction capacity is significantly greater than that of Ethereum – over 1,600 times – the total value of the payments processed by the two networks on a daily basis does not present a major discrepancy.

At its peak on January 4, Ethereum processed about 1 million transactions. Currently, according to Etherscan, Ethereum is processing around 500,000 transactions a day, which means Visa is processing a volume that is three hundred times larger than that of Ethereum. Although the transaction capacity of Ethereum is significantly lower than Visa's, the relatively high daily transaction volume of the network demonstrates a relatively high user activity.

Source: Etherscan.io

Ethereum is not that far from reaching Visa's transaction capacity, which is very impressive for a fully decentralized and peer-to-peer (p2p) blockchain network. Previously, the co-creator of Ethereum Vitalik Buterin said that the Ethereum network could potentially reach 1 million transactions per second with second-level scalability solutions such as sharding and plasma.

On blockchain public networks, downsizing solutions relieve pressure on the main network by processing information outside of the main infrastructure. For example, on Ethereum, sharding and plasma can process transactions outside the main network to increase the network's ability to manage information.

"The reason I think of level one and the second level [networks] they are complementary because, ultimately, if you look at mathematical calculation, scalability increases from level one improvements and level two improvements ultimately multiplies one with the other. If you have a sharding solution, the same sharding solution could increase the scalability of Ethereum by a factor of 100, or possibly even more. But then, if you do the Plasma above the scalability solution, then it means you're not only doing 100 times the amount of activity but you're doing 100 times the amount of revenue, the amount of outputs and despite resolutions. "

Red belly against centralized blockchains

Projects of licensed registries initiated by large-scale financial technologies and institutions, such as Intel and JPMorgan, have demonstrated a huge transaction capacity of over 100,000 transactions per second and the ability to process any size of information on demand.

However, both Intel's Sawtooth Lake Blockchain and JPMorgan quorum are blockchain networks focused on the business that maximize transaction capacity within a closed ecosystem. So, by definition, most of these blockchain networks developed by conglomerates are not decentralized or peer-to-peer. JPMorgan has described its blockchain as a high throughput, authorized ledger for private transactions:

"Quorum is ideal for any application that requires high-speed, high-speed processing of private transactions within an authorized group of known participants, quorum addresses specific challenges for the adoption of technology blockchain in the financial sector, and not only. "

Instead, researchers from CSIRO and the University of Sydney emphasized that the Red Belly Blockchain was created with attention to decentralization. Although the network is still undergoing pilot testing, its development team demonstrated efforts to test the blockchain in a decentralized environment by placing 1,000 virtual machines in 18 geographical regions.

In an actual mainnet setup, these machines were replaced with nodes, so the Red Belly Blockchain would work structurally similar to Bitcoin, Ethereum and other public blockchain networks.

"The experiment implemented Red Belly Blockchain on 1,000 virtual machines out of 14 of the 18 geographic regions of AWS, including North America, South America, Asia Pacific (Sydney) and Europe.We set a benchmark by sending 30,000 transactions per second from different geographic areas, demonstrating an average latency (or delay) of three-second transactions with 1,000 replicas (a machine that keeps a copy of the current status of the blockchain and the balance of all accounts.) "

Minimization of energy consumption

More importantly, the Red Belly Blockchain development team has set up several key project missions to ensure that the foundation of the initiative is not to replicate a blockchain network in order to experiment with an emerging and disruptive technology.

He started the project to solve two problems encountered in Bitcoin and in other public blockchains: the consensus algorithm and the proof-of-work (PoW) scalability.

"Red Belly Blockchain is solving the problems that have afflicted previous generations of blockchain systems including the environmental impact of significant energy use, a double expense where an individual spends his money twice by starting more than one transaction and throughput, which refers to how many units of information can be processed in a short amount of time. "

The Red Belly Blockchain development team said they replaced the PoW algorithm on its network with a unique algorithm that requires no electricity consumption. The developers have not released technical complications of its algorithm, but based on statements about the use of Bitcoin's electricity, it is highly probable that the project has used proof of stake (PoS) consent algorithms or proof-of-order delegates. -stake (dPoS) in place of PoW.

In the Red Belly Blockchain press release Vincent Gramoli, CSIRO's Data61 senior researcher and head of the Concurrent Systems Research Group at the University of Sydney, pointed out that he believes the next generation blockchain will present consensus algorithms that require no infrastructure. mining and energy consumption, which limits the ability of blockchains to process information and increase costs involved in the production of data blocks.

"The real world applications of the blockchain have struggled to take off because of problems with energy consumption and the complexity induced by the demonstration of the work. The distribution of Red Belly Blockchain on AWS shows the exclusive scalability and strength of the ledger technology new generation in a global context. "

Demonstration of the pile and massive downsizing

Since its launch in 2015, Vitalik Buterin, Vlad Zamfir and several Ethereum developers have established a solid roadmap for integrating the long-term PoS consensus algorithm.

Constantinople, a new update of the Ethereum four-step development roadmap, is scheduled for release in October. A part of the fork or upgrade is to integrate the PoS protocol of Vlad Zamfir Casper, which rewards the validators with ETH for the processing of information. To discourage or prevent bad actors in space, Casper cuts a percentage of the mail of validators who try to sabotage the network.

In addition to Ethereum, there are several PoS systems, such as Cardano and EOS, which record a significant increase in the number of decentralized applications (dApps) and user activities.

PoS-based blockchain systems can handle a large capacity for information and transactions because it does not require miners to verify information. It allows nodes and verifiers of alternative data on the network to process information punishing bad actors in the ecosystem. Ari Paul, co-founder of Crypto Hedge Fund BlockTower, has explained in a debate on PoS versus PoW:

"There are several large-scale PoS systems today, how do you see them failing in practical terms, and why they have not failed yet?" This is a very complex discussion, but let's take Ripple, for example, a lot of clear vulnerabilities in games, but PoW also has a lot in. In practice, I think of many vulnerabilities, such as long-range [attacks], they are mostly academic. For example, with BTC, you need a trusted original source for consent rules and client code. In practice, this is extremely similar to PoS 'long-range attack vulnerability. "

The shift of attention from PoW to PoS by major public networks of blockchains and government agencies demonstrates an emerging trend in the global community of cryptocurrencies, which is to experiment with blockchain networks that are highly efficient and consume a limited amount of power.

Take advantage of the existing infrastructure to efficiently distribute the blockchain

In August, the World Bank and the Commonwealth Bank of Australia (the largest commercial bank in the country) issued the first ever link on the Ethereum blockchain, using Microsoft's cloud computing infrastructure.

Nicknamed Bond-I, the two financial institutions have launched a blockchain-based debt tool using Ethereum and Microsoft's blockchain computing platform, Azure, to liquidate orders and transfers on the main Ethereum network. As General Manager of Commonwealth Bank Australia, James Wall, stated at the time:

"We believe this transaction will be revolutionary as a demonstration of how blockchain technology can serve as a facilitating platform for different participants."

Arunma Oteh, treasurer at the World Bank, revealed that demand for blockchain-based bonds has grown to a point where companies, fund managers, government institutions and banks have begun to show interest in bond and blockchain technology .

For the Commonwealth Bank of Australia, the process of issuing bonds on the blockchain was quite simple because it was able to use Microsoft's cloud computing infrastructure to implement its blockchain-based system.

Likewise, the developers of CSIRO and the University of Sydney collaborated with AWS and its cloud platform to implement its blockchain testnet in a practical and efficient way. Simon Elisha, Head of Solutions Architecture, public sector Amazon Web Services, Australia and New Zealand, explained:

"AWS Cloud provides innovative organizations of all kinds with a global computing power network, enabling organizations like Red Belly Blockchain to quickly conduct large-scale experiments that open new horizons: this is the latest example of how manufacturers and creators from all over Australia are leveraging AWS to move a project from the conceptual stage quickly and cost-effectively to the realization of commercial potential, locally and globally. "

In the coming months, the global blockchain industry will see more tests on the centralized cloud infrastructure due to various advantages and merits. In July 2017, the Red Belly Blockchain conducted two experiments and the first test showed a throughput of 660,000 transactions per second.

However, because the team has implemented blockchain on a larger network with significantly more nodes, the network's transaction capacity has dropped to 40,000 transactions per second, which is more realistic. Even in the presence of a PoS system, it is difficult to synchronize thousands of nodes and process information exclusively on the main network without second-level scalability solutions.

The test on a cloud infrastructure offers blockchain projects the flexibility with nodes and the size of the environment that can realistically replicate a real mainnet setting. The presence of such platforms – and the growing progress in the blockchain industry to commercialize and scale technology – could lead to an influx of blockchain projects in the coming months.

It is good for the long-term growth of the industry that prestigious universities and government agencies are working to create blockchain networks that actually try to solve the problems of existing first-generation blockchain protocols. It remains to be seen whether these blockchain networks will be publicly distributed and potentially in competition with other blockchain and cryptocurrency networks.

Structurally and conceptually, Red Belly Blockchain's competition, if it intends to become public and accessible in the global market, is another PoS and a unique consensus algorithm, which uses blockchain protocols such as Cardano, EOS, Ripple and Stellar.

Crypto and blockchain regulation in Australia

In 2016, the Government of Australia announced its decision to remove its double taxation law for the digital currency.

Until 2017, the major Australian banks would have denied banking services to crypto trade, limiting the cryptocurrency market to investors in the local financial sector. This led to the growth of the local cryptocurrency trading market to stagnate until April, when trade began to enter the Australian market.

Until December of last year, cryptocurrency transactions, any payments sent to cryptocurrency trading platforms were censored by the National Australia Bank, ANZ, Commonwealth Bank of Australia and Westpac Banking Corporation.

On December 30, 2017, a Westpac spokesman did not deny the allegations against the bank and stated that the use of Westpac bank accounts must comply with local anti-money laundering regulations (AML).

"Where we are unable to verify the origin of the transfers, we can take action to ensure that we comply with Australia's obligations on money laundering."

However, on April 11, 2018, the Australian Reports for Transaction and Analysis Center (AUSTRAC), announced the implementation of new regulations for encrypted companies to improve its local crypto and blockchain sector.

The Government of Australia has since licensed three cryptocurrency grants, allowing companies to operate as providers of money transmission services with guaranteed banking services.

The government has also started to protect investors from misleading Initial Coin Offering (ICO) projects, warning blockchain projects that collect money from the public with serious legal obligations that must comply with local regulations. The new policies imposed by the Australian government on blockchain projects could help investors to raise awareness about poor and illegitimate projects.

With the development of active blockchain initiated by government-funded agencies and a growing cryptocurrency exchange market, Australia could see rapid improvement in the country's crypts and blockchain space for years to come.

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