Before Cryptocurrencies can be considered as a worthy competition to our existing monetary system and accepted by all, there is still a long journey ahead for the like of bitcoin, ethereum and the Altcoins, a lot of development and its scalability has to be considered which was the point put forward by co-founder of ethereum Vitalik Buterin in an interview with mainstream investor Ravikant Naval at a Disrupt SF 2017 conference hosted by TechCrunch.
Before delving into scalability issues around digital currencies, the vital fact to acknowledge is the complexity surrounding the scaling of a decentralized blockchain network to expanding centralized system which is less tasking. With closed networks like Visa and Paypal, it is relatively easy and cost little to get flexible and cater for billions of users depending on their services.
The selling point or area of focus for cryptocurrency is security, prioritize decentralization by operating on the blockchain which is a transparent ledger that gives everyone equal level of access to operate, process and facilitates effective data transfer.
Cryptocurrencies have been integrated with a scaling solutions, also an alternative technologies which are in development stage by a group of open-source development communities of the blockchain network are unparalleled. Off-chain and On-chain and two-layer solutions has made developers attempting to optimize ways in which blockchain process transactions and smart contracts.
In the past, it took the bitcoin community almost a years and half to implement the bitcoin core development teams (Segregated Witness “SegWit”), which have proved successful in scaling of the bitcoin network. Developing a scaling solution itself is somewhat complex but consensus has been reached among cryptocurrency developers, users, miners, businesses and node operator is already a challenge on itself.
Vitalik Buterin made a statement: he said “Bitcoin is currently processing a bit less than three transactions per second and if it goes close to four, it is already at peak capacity. Ethereum has been doing five per second and if it goes above six, then it is also at peak capacity. On the other hand, Uber on average does 12 rides per second, PayPal several hundred, Visa several thousand, major stock exchanges tens of thousands, and in IoT, you’re talking hundreds of thousands per second.”
Developers will need to put on their thinking cap to innovate, build efficient and robust scaling solutions if cryptocurrencies will ever hope to surpass the present monetary system like Paypal, Visa and the giant of them all stock exchange in terms of volume processing and scaling that is for cryptocurrencies to evolve into a trillion dollars and blockchain networks, the present scaling framework solution won’t be enough to compete.
Cryptocurrency is still a strange word to some people as the majority embracing digital currencies are more of developers of the system, tech startups and few enthusiastic individuals that can see the benefit of using it and keep their transaction anonymous and spend less in processing fee compared to our present monetary system. Before cryptocurrency can be widely accepted and adopted, the developers of this open-source system have more work to make sure it is seamlessly scalable without losing its efficiency and security which are what’s gaining popularity for and its unique selling point. Spending millions and transacting millions without any means to trace the sender or receiver, while revealing transparency on its blockchain.