Blockchains: The Next Generation? In the beginning, there was “the blockchain”. Fast forward to 2017 and suddenly an entire marketplace has developed containing a range of public, private and consortium blockchains. And now a swathe of new contenders are also promising to bring us “next generation” blockchains. Unpicking which of these platforms does what and how they all work, however, is not always easy.
The Granddaddy of blockchain remains, of course, the Bitcoin blockchain – it was the first, it remains the largest, and it has famously never been hacked. But existing blockchains nevertheless have their downsides and detractors. The most common criticisms are high by transaction fees, the need for greater HELEN DISNEY speed and, in the case of Bitcoin, criticism that the energy consumption required to power the network through bitcoin mining is environmentally unsustainable. Indeed, according to the Bitcoin energy consumption index, Bitcoin already currently consumes 0.15% of the world’s energy, and far exceeds the electricity consumption of Ireland or of most African nations.
coin has grown with recent prices soaring over $10,000, many more people want to get involved and use the network. This has led both to an increase in centralisation of the mining process that powers the network, and also a rise in user fees. On Ethereum, the creation of the ERC20 smart contract standard - which allows for the launch of token sales or so-called ICOs - has led to such a growth in users that on certain occasions when particularly popular coin offerings like Bancor and Status launched, the network almost ground to a halt. Security has also been a major concern. No surprise that Co-Founder, Vitalik Buterin, recently unveiled the roadmap for Ethereum 2.0 which intends to address issues of privacy, as well as fixing speed and scalability problems through a process known as sharding.
Both of the most well-established blockchains – Bitcoin and Ethereum – are currently involved in intense debates about transaction speed and scaling. In fact, to some extent, both systems are becoming victims of their own success. As mainstream interest in bit-
Yet while these debates continue to rage intensely on Twitter and Github and at Blockchain conferences, over the past year a series of newcomers have entered what is becom-
IOTA’s key goals are getting rid of fees, and increasing speed and scalability. Hashgraph’s performance speed appears to be unmatched, and its founders say that it is currently the only “banking grade” consensus algorithm in the market.
ing a more crowded Blockchain marketplace, each offering distributed peer-topeer platforms which promise solutions to some of the existing roadblocks. To simplify, the consensus mechanisms being used can broadly be grouped into 3 different categories: Proof of Work Blockchains (e.g Bitcoin, Ethereum), Leader-based Systems (Hyperledger Fabric, R3 Corda, Quorum), and Economy-based (IOTA, Casper, EOS), also known as Proof of Stake. One such new generation distributed system is IOTA. Its innovative potential comes from a technology known as the Tangle, which is not strictly-speaking a blockchain but rather a directed acyclic graph (DAG) or, in slightly more user-friendly terms, what its founders call a peer-topeer ‘blockless distributed ledger’. IOTA’s key goals are getting rid of fees, and increasing speed and scalability. The platform is particularly aimed at becoming the backbone for data being generated by the Internet of Things (hence, the IoT in the name) and most recently, they
Published on Dec 28, 2017