Blockchain technology is becoming increasingly integrated into the mainstream, beyond the popular cryptocurrency market. Even traditional financial institutions, banks, investment companies, etc., which were originally intended to be bypassed by blockchain technology, are getting on board and utilizing blockchain technology within their own financial platforms.
General Benefits of Blockchain Technology
Blockchain is built upon the strong belief in a decentralized, transparent, and secure digital ledger system. More importantly, the mission of blockchain is the “exchange of value without powerful intermediaries acting as arbiters of money and information.”
Blockchain boasts cheaper transaction costs — which makes sense since it seeks to bypass financial institutions, which make their money from charging fees for transactions. Not only are these transactions cheaper, but they’re also faster than traditional methods, which include third parties that can substantially slow the process down.
Aside from more cheaply and efficiently processing financial transactions, blockchain is used in so many more applications that take advantage of opportunities for user-controlled networks and the ability to provide an auditable and traceable transactions ledger, building a level of trust between counterparties without a previous history of doing business together. For example, every single user utilizing a blockchain ledger can see what is going on in real time; no one can update the ledger without the agreement of all parties, making blockchain ledgers more accurate than other types.
Efficiency Advantages of Blockchain
Humans are slow and make mistakes. Whenever work must be double- or triple-checked by another person, add the time it takes to fix an error, and businesses are using way too many valuable resources to ensure consistency in a process that could be automated. Utilizing blockchain for any business process is advantageous for a variety of reasons, including the following:
- Efficiency is Improved. Blockchain eliminates a lot of redundancy in operational processes by automating many of them in a fool-proof, stable environment. For example, if blockchain is used as a ledger, it requires only one master list, eliminating the need to merge multiple lists. It also ensures that the information processed within the document is correct, again removing any doubt from the accuracy of the data. This will allow employees to be utilized in other ways, since their time will not be spent checking, rechecking, and fixing mistakes on a common document.
- Companies Save Money. Businesses are obviously concerned with their bottom line. When efficient systems like blockchain are adopted for everyday business processes, the need for third parties will be reduced or eliminated, saving money on company expenses.
Speed Advantages of Blockchain
The biggest driver toward creating a faster blockchain is to encourage businesses to be more willing to adopt the technology in their everyday business. Microsoft is working to achieve a faster blockchain. Through its Confidential Consortium Blockchain Framework, also known as the Coco Framework, Microsoft is aiming to produce a blockchain that is 100 times faster than average. As highlighted on many of the top blockchain blogs, the Microsoft blockchain is compatible with Ethereum, a popular blockchain type.
Mark Russiniovich, chief technology officer of Azure, the cloud computing division at Microsoft, was quoted in a Fortune article stating, “We expect this to be the foundation of blockchain for enterprise. We think blockchain is going to potentially transform every industry.” The additional goal, aside from faster blockchain networks, is also to address privacy issues raised by those in the private sector.
One major advantage for corporations to utilize blockchain technology is the cost savings associated with a faster network that is also incredibly secure and private. Many companies, such as financial institutions, that work with heavily private data are turning to blockchain to improve security and protect sensitive information.
According to Reuters, one of the issues with integrating blockchain in companies that depend on intense data privacy is that there is a potential for those with access to the blockchain network to see the data — since the technology is based on this premise. Therefore, corporations have been hesitant to adopt the technology.
Another goal of Microsoft’s Coco Framework is to give corporations the ability to limit who can access what on a blockchain platform while simultaneously allowing for faster network speed. The Reuters article states that companies such as Quorum (JPMorgan Chase & Co. blockchain), Sawtooth (Intel blockchain), and Corda (blockchain of the R3 bank consortium) are all expecting to adopt the Coco Framework.
Bitcoin blockchain can process an average of 7 transactions per second which make it one of the slowest blockchains around – especially compared to cryptocurrency platforms like Ethereum, Ripple, and LTC and centralized platforms such as PayPal and Visa. It takes about 60 minutes for the transactions to be confirmed.
Ethereum blockchain can perform up to 12–20 transactions per second, which is pretty slow compared to Ripple, LTC, BCH, PayPal and Visa and it takes up to 6 minutes an individual transaction to be confirmed. While Bitcoin is getting most of the attention these days, Ethereum is right behind it.
Ripple is a popular cryptocurrency platform which can process up to 1500 transaction per second with 4 second confirmation time, which is way greater than BTC, ETH, and LTC. Ripple is far ahead of the curve in proven transactions speeds, and their dev team claims that it can reach up to 50,000 TPS.
PayPal and Visa
The most popular centralized platforms, Visa and PayPal, can process 24000 (56000 max TPS) and 193 (450 Max TPS) transactions per second respectively. Visa is currently the most advanced and fastest platform that can handle the greatest number of transactions per second.
MATRIX AI Network
MATRIX AI Network, a Hong Kong-based blockchain and AI technology company, recently launched a new public demonstration of its proprietary technology, heralding a new standard in transactional speed and efficiency. “The AI-based MATRIX platform has an ability to process more than 50,000 transactions per second — more than Bitcoin, Ethereum, Ripple, more even than PayPal and Visa! “This is because of the fusion of powerful artificial intelligence and the hybrid consensus (PoW + PoS) mechanism of the MATRIX blockchain,” explained Owen Tao, CEO of MATRIX AI Network. “With the PoS-based random clustering, a small number of nodes will be chosen as delegates. The transactions are broadcast only among these delegates. In previous blockchains, transactions have to transfer to every node in a P2P network and the latency increases as the number of nodes grows. With our algorithm, the small number of nodes enables a significantly lower latency because of the reduced overhead of broadcasting transaction.”
The Need for Speed
A high number of transactions per second is a necessity if blockchain technology is ever to support large commercial applications. If a network’s transactions per second are too low, the network is at risk of crippling congestion. This may result in a failure to properly confirm transactions or impact the effectiveness of the transaction itself. Hard forks have become an industry norm.
A faster blockchain is on the horizon, which will give corporations and other institutions the power of secure, private, protected, and fast data sharing capabilities and the widespread commercial adoption of blockchain technology. Opinions expressed here by Contributors are their own.