Blockchain Scaling: Relax and Trust the Process

June 5, 2019 / by Steven Lubka

The process of technology discovery, innovation, and improvement is a fundamentally human story. When humans discover a new technology or application, there is, over time, a continuous process during which that technology becomes refined. We know a lot more about making a wheel today than we did thousands of years ago, and we will know even more a hundred years from today.

Blockchains and cryptocurrencies are new technology. While Bitcoin has existed for 10 years, it is only in the last several that significant collective resources have been deployed into research and development.

If you have followed the discussion around this technology, you have probably encountered debates about scaling. Scaling is the process of engineering blockchains to process a greater number of transactions, computations, and applications.

Essentially, it is the question of how we make this technology more efficient and applicable. Blockchains are notoriously slow, inefficient, and more difficult to scale than traditional technology due to the constraints of working with a decentralized network. Decentralization presents a unique set of challenges that are just now beginning to be solved.

An important part of the dialogue about scaling concerns the current limitations of the technology and how that directly affects what it can be used for. It is common to hear a proposal for a specific application of blockchain only to hear the proposal shot down by someone who sees this application isn’t possible given certain technical limitations.

Many critics — and even some supporters — wonder if the technology will ever amount to anything because of the technical inefficiencies it must overcome along with certain other well-known challenges.

However, we would argue against downgrading the potential scope of a technology based on its current technical limitations. The history of technology shows us that these limits are usually overcome. When we envision and discuss potential applications of blockchain and cryptocurrencies, we assume that these problems will be resolved instead of limiting our thinking to simply what can be done today.

This is rationalism, not idealism. We are not assuming all problems will be magically solved, but instead, we are looking at the history of technology and observing the trend towards overcoming technical limitations — even ones that at one time appeared insurmountable.

Looking over the events that have taken place from 2018 to 2019, we can see this trend play out. As the 2017 bull market cooled down, it was common to encounter viewpoints that feared the technology would never be able to progress. Doubt was heavy.

Yet, as we now have the benefit of seeing what has occurred since that time, we are able to see that these doubts were unfounded. All of the major networks and protocols have made significant strides. New approaches have been implemented, and despite the crypto winter, interest remains strong for those who are committed. Bitcoin’s lightning network has grown tremendously. Transaction volumes are reaching highs, and major institutional support has emerged from players like Fidelity.

Ethereum is also approaching its heavily anticipated 2.0 upgrade and is close than ever to implementing a number of scaling solutions. Binance has deployed its decentralized exchange. Blockchain applications are being pursued by $50 billion companies, according to a new report. Major players are using this technology to track goods and speed payments around the world.

Looking at the evolution of computers is a good case study to see how technology development takes place. If you look back to the development of the computer, you will find that even computer science experts and CEOs of tech companies got it wrong when it came to understanding how the technology would develop. Even the very informed thought that something akin to a personal computer would be impossible, that the technology would always be large, expensive, slow, and inefficient. Sound familiar? We hear those same statements about blockchains and cryptocurrencies.

Yet we know computers eventually evolved from taking up entire rooms to fitting in your hand. However, there was a long period of time when we had no idea how to make these machines smaller and more efficient. It was only after a series of breakthroughs that the possibility emerged.

So for those years, it seemed impossible. People could only speculate that we would overcome these challenges but could not explain how we would do it.

We would argue that this is where we have been in terms of blockchain and cryptocurrency development currently, and more recently, we are reaching its adolescence. People can speculate that we will one day have blockchains that will have solved a number of technical challenges, but no one can really say how — although we have some good ideas at this point, and they are becoming clearer.

However, if you watch closely, you will see individual breakthroughs being made, and this is where we see evidence for this forward-looking way of thinking. This is clear just comparing 2017 to 2019.

Consider one innovation that emerged during the last 18 months. You probably didn’t hear about this one because it was published in an academic journal, and the story wasn’t picked up by major media outlets.

The paper is titled “MOF-BC: A memory optimized and flexible blockchain for large scale networks,” and we will outline it simply. If you are interested in more detailed information, please read the paper.

It covers the creation of a memory-flexible blockchain. One of the benefits of blockchains is that they create a permanent, immutable record. This creates trust, but also presents a problem if we are dealing with private or sensitive information. While there are many good ideas that involve using a blockchain to deal with this sort of information, this limitation is often cited as a problem in the scaling debate.

For example, an idea will be presented that involves sensitive information. Critics will counter that data stored in a blockchain is permanent, and, therefore, this application presents a privacy issue.

However, the paper’s authors have invented a removable blockchain that is compatible with all current blockchain installations. Essentially, it allows information submitted to a blockchain to later be removed, without impacting the permanency of the record.

But how can you remove something and still have a record of it? The authors propose replacing the data with a hash of that data. The hash stays on the blockchain, so the original data, which exists outside the blockchain, can later be verified as it will always produce the same hash.

For example, say a user uploads home sensor data to a blockchain for a home insurance policy. The policy requires them to have a record of the data on a blockchain, but this data also presents a privacy risk for that individual. A memory flexible blockchain allows there to be hash of data on a blockchain, which does not contain any of the actual information. However, this hash can be verified to have come from a specific data set by hashing the data set in question and comparing it to the hash on the blockchain.

This solution not only manages privacy-sensitive applications but also reduces blockchain storage demands, another area that is extremely limited.

The solution presented by the authors of MOF-BC is one piece in the larger tapestry that will build the next generation of blockchains. Before a solution exists, a given challenge may seem insurmountable, but over time, individual breakthroughs come together to help this technology make a quantum leap forward.

This is how technology has always evolved. The rational choice is to relax and trust the process. The rational choice is to trust that things will change and evolve as everything does. It is better to focus on what is fundamentally possible instead of what is possible right now with the current technical limitations.

As a collective, humans are incredibly brilliant and hundreds of people working on something can produce solutions no single individual can. The future of truly applicable blockchains will be something that emerges from the hundreds if not thousands of people working to solve these problems. It will happen gradually and then all at once. So don’t let your imagination be dampened by the current landscape. Instead, allow yourself to imagine the possibilities and assume that many things will find their solution in time.