Question

(b) Carry out a thoughtful analysis on the latest development in blockchain technology,

appraise three (3) solutions to overcome the problem of slow transaction speed. You

should demonstrate a clear logical flow in your analysis.

Answer 1

Blockchain technology is a structure that saves transactional records, also known as the block, of the public in several databases, known as the “chain,” in a network connected in between peer-to-peer nodes.This storage is referred to as a 'digital ledger.

Blockchains having Interoperability between them

New blockchain networks. This leads to new chains that offer different speeds, network processing, use-cases and so on. Blockchain interoperability aims to improve information sharing across diverse networks or blockchain systems. These cross-chain services improve blockchain interoperability and also makes them more practical for day-to-day usage. For example, with blockchain interoperability,can send information from EOS to Ethereum blockchain.

Federated Blockchain

Federated Blockchain is also an evolution of the normal blockchain and is ideal for many specific use-cases. In coming time also see a rise of the use of federated blockchain as it gives private blockchain more customizable outlook. Federated blockchains are similar to private blockchain with a simple twist. Instead of one organization controlling it, many authorities can control the blockchain.

Hybrid Blockchains

There are few versions of blockchain at play and Hybrid blockchain can be one of the trends . The hybrid blockchain is the best of both worlds. It works by providing the best features and functionality of both public and private blockchain. For example, the government cannot just go entirely decentralized by using public blockchain. However, they also cannot use private blockchain in some of their services as they need to interact with the people. In these cases, Hybrid blockchain provides an ideal solution by providing a customizable solution and also making proper use of what blockchain has to offer such as transparency, integrity and security.

Solutions to overcome the problem of slow transaction speed.

Increasing block size-

The first and most straightforward solution is to increase block size.

Going back to the train analogy, this means increasing the train’s seating capacity from 10 to, say, 20 people. This way, the train can transport more passengers at a go and reduce congestion at the station.

The current block size for bitcoin is 1 MB per block. Bumping that up to 2 MB per block can double the number of transactions processed per second. The bigger the block size, the higher the number of transactions processed per second.

Off-chain solutions-

The second possibility is through off-chain solutions, like the Lightning network for Bitcoin, Raiden network for Ethereum, and Trinity for Neo.

With current methods, every time you make a transaction, it has to be approved by every node in the network. (A node is a computer that runs the algorithms to process the transactions.)

For example, if you want a cup of coffee from a particular cafe every day for a month. The coffee costs $1, but you don’t want to burden the entire network for a $1 transaction. Making a daily $1 transaction on the network is very costly.

Delegated consensus protocol

Processing transactions on the blockchain network is currently slow because every node in the network has to process every transaction. So if there are a thousand nodes in the network, then all of them would have to process every transaction made in that network.

It’s as if you have a group of 500 people, and each person has to agree on something. Not only will the process be lengthy, but it will also be very messy.

Instead, what if you pick 10 members from the community, appoint them as governing members of the group, and let these 10 people make a vote? It’ll be much easier and faster for them to reach a given result.

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