by Lumai Mubanga
The purpose of innovative solutions is to be more efficient, secure and trusted in comparison to present solutions. In business especially, trust, security and efficiency are the hallmarks of adoption. However, the coming of blockchain in the business world has elated a lot more and more business to adopt it based on the same premises. While blockchain for sure has proved to be more secure and trustworthy, there seems to be one area in which more innovation is required to polish it up and make it to near perfection. That is the area of efficiency.
How inefficient is blockchain?
It may come as a surprise to some users that blockchain is in some aspects, inefficient. We are not talking about the whole system being inefficient, but some aspect of its design. This is in the aspect of the transaction rates.
Take as an example of how long it will take you to cash in for a Pepperoni Lover’s® Pizza (Pan Pizza) Personal costing $4.79 using cash. Once the order is placed, it will only take a few seconds for you to reach out into your purse, get the $4.79 to pay your bill. Imagine that you have to pay using bitcoins! The same transaction that lasted a few seconds would take roughly takes 10 minutes to be confirmed and completed. That’s the inefficiency on the blockchain right now.
Why the inefficiency?
It is all about consensus. It is this idea of asking all of the nodes on the network; potentially tens of thousands of nodes, to repeat the same work, then periodically come together, and agree on whatever the majority select to be the correct or right version of the truth. Only then is the consensus reached and a transaction completed.
Proof of work has been a long time blockchain protocol used for this purpose. With more than ten years in use, it has been adopted by both private and public blockchain. However, one biggest limitation has been its inability to scale faster. Another one has been its ability to process transactions between 50 and 20 transactions per second on a worldwide scale. This falls far too short of the more than 70, 000 transactions completed per second by a system like VISA! That is where the inefficiency lies.
What is being done
Due to its wider adoption and other admirable properties of security and trustworthiness compared to current systems, developers and designers have been looking for better alternatives to proof of work. Many proposed alternative consensus methods can now be used that allow for scale. One example now is the likes of Tangle, which uses a blockless solution, and they’re also new and emerging consensus methods like Proof of Stake or Proof of Activity that have been tested and are currently proving to function as anticipated to take the work out of Proof of Work.
While there may be those limitations based on the rate of transaction processed by the widely adopted proof of work, blockchain remains the preferred innovation. With time, those limitations will become things of the past and blockchain will finally stand on the three highly-priced value propositions of trust, security and efficiency.