Scalability is one of the main challenges faced by distributed ledger technology. It is widely felt that in order to challenge traditional payment networks and assume a key role in the decentralized future of the internet, blockchains must find ways to radically improve their throughput, measured in number of transactions per second. “Today’s representative blockchain such as Bitcoin takes 10 min or longer to confirm transactions, achieves 7 transactions/sec maximum throughput,” note the authors of a recent research paper titled "On Scaling Decentralized Blockchains," presented at the Financial Cryptography and Data Security 2016 conference. “In comparison, a mainstream payment processor such as Visa credit card confirms a transaction within seconds and processes 2000 transactions/sec on average, with a peak rate of 56,000 transactions/sec.” On the Bitcoin blockchain, lightning networks offer a promising approach to Bitcoin scalability, enabling the Bitcoin system to process transactions at a high rate and low cost, thereby positioning themselves as suitable alternatives to existing payment networks. Now, a similar counterpart is set to emerge on the Ethereum blockchain: the Raiden network. In a lightning network, related transactions take place almost instantly on off-chain “micropayment channels” and only the final settlement is processed by the blockchain. While there are interesting preliminary implementation s, the adoption of lightning networks in Bitcoin is likely to take some time because it requires appropriate tweaks to the Bitcoin Core platform. But Bitcoin is not the only blockchain in town. Ethereum, an alternative blockchain technology framework which offers higher flexibility and programmability for smart contracts, is gaining momentum at an impressive rate, despite momentary setbacks like the recent drama around The DAO. Recently R3 commissioned Ethereum creator Vitalik Buterin to write a report on Ethereum’s design, upcoming technical developments and applications in private systems. Buterin’s 44-page report gives a detailed overview […]
