By Demetri Kofinas of Hidden Forces
Has been recently leading the charge in reporting on what may be one of the biggest technological breakthroughs of our time.
Much of the tech and finance worlds have naturally become entranced by blockchain technology. Investors are making lots of money, and engineers are getting carried away by the sexiness of building endless distributed applications (DApps).
Most, however, have their heads in the sand with respect to the problems and limitations of blockchain technology, namely scaling, security, and fairness.
But, don’t take our word for it.
Listen and read carefully to the words of Ethereum’s own benevolent dictator, Vitalik Buterin.
At this past summer’s Disrupt SF 2017, Vitalik sat down with AngelList’s Naval Ravikant to talk about Ethereum and blockchain technology.
The entire interview is a must watch/listen, but the key area of focus here is the 10:40 mark to 17:00.
Vitalik states:
“If you look at the raw number of blockchains today, Bitcoin is currently processing a bit less than 3 transactions a second, and if goes close to 4, it’s already at peak capacity. In Ethereum, it’s been doing [transactions] about 5 a second, and if it goes above 6, it’s also at peak capacity.”
Vitalik shares some speed/throughput comparisons:
- Uber: 12 rides per second
- PayPal: 100’s of transactions per second
- Visa: 1,000’s of transactions per second
- Stock Exchanges: 10,000’s transactions per second
- IoT: 100,000’s of transactions (needed)
- Non-Financial DApps: 1,000,000’s of transactions (needed)
Vitalik then goes on describing the current gap between transactions per second (TPS) now versus what is practically needed to actually compete in the real world:
“[Filling this gap] has not materialized into action yet precisely because of some of these technical obstacles that make blockchain work okay for some niche use cases, but not really work well for mainstream use.”
Well, what is the Ethereum/blockchain community doing to overcome these technical obstacles?
Vitalik, of course, mentions some of the potential solutions cloaked in buzz-word names like: Plasma, Sharding, State-Channels, Raiden, and Perun.
Vitalik admits that ALL of these approaches have their own trade-offs, and there is a huge amount of technical work involved in figuring out what the right trade-offs are.
So, what is Vitalik’s timeline to pull off a potential solution (of course, with these trade-offs)?
- 1 year out: Have a prototype ready (albeit with a “low security level” trade-off)
- Couple of years out: Ability to possibly compete with Visa (1,000’s of transactions per second)
- Not likely going to happen…ever (no matter how good blockchains become): Ability to compete with Amazon Web Services (AWS Cloud)
In a separate interview with a16z last year (key time area here: 42:20 – 44:20), Vitalik goes into more detail about some of the limiting factors of blockchain going forward:
- “The technology, in general, being perceived as trusted.”
- “Government and regulatory issues.”
- “User interface issues.”
- “Practical security concerns.”
- “Constraints that have to do with the technology [blockchain] itself.”
Vitalik goes on to talk about the huge amount of applications coming out [via ICO’s], especially the ones that people are often most excited about, that would be viable only if blockchains could do 50,000 transactions per second…and are totally NOT viable if blockchains can only do 15 TPS.
He goes on:
Ethereum, Bitcoin, Bitcoin Classic, and Bitcoin with SegWit – all four of those are pretty much completely useless for what people want to do [with these applications] because the scalability just isn’t high enough. That’s just one practical thing that we’re just going to have to get over in some way – that technological barrier is going to have to be solved over the next few years or so.*
*Notice the extended silence from the interviewer at 44:20…
Still bullish on blockchain?
There is potentially good news out there for the crypto world though…
The true hidden forces of distributed ledger technology (DLT) may end up surprising a lot of people.
Blockchain may end up being the horse and buggy.
Blockchain Technology?
Hashgraph, a new consensus algorithm and form of distributed ledger technology, invented by Dr. Leemon Baird, may end up being the Model T…maybe even, Tesla, of our time.
Hashgraph is:
- Fast with a high throughput (300,000+ transactions per second pre-sharding)
- Fair (mathematically proven fairness with consensus time stamping)
- Secure (asynchronous byzantine fault tolerant).
These properties expand DLT use cases to complex markets, auctions, crypto-currency micro payments, live games (even MMOs), and much more.
Hashgraph – the future of DLT and the Internet as we know it?
For more information on hashgraph, please check out the latest from Hidden Forces’ coverage below and/or at: www.hiddenforcespod.com
The Future Is Not Blockchain. It’s Hashgraph. | A Conversation with Leemon Baird
What is Hashgraph?
Notable Quotes:
Leemon Baird (creator of hashgraph) on aBFT:
Unlike the other systems, hashgraph is proven to be fully asynchronous byzantine. This means it makes no assumptions about how fast messages are passed over the internet, making it resilient against DDoS attacks, botnets, and firewalls. Hashgraph is mathematically guaranteed to reach consensus and be secure as long as less than one-third of participants are malicious (which is something that must always be assumed for DLT).
Leemon Baird (creator of hashgraph) on Bitcoin:
Bitcoin is not byzantine. It’s not even byzantine under bad assumptions. In Bitcoin, there is never a moment in time where you know that you have consensus and you’ll never be wrong. All that happens is that you become more confident over time, but it’s not byzantine. Period.
Leemon Baird (creator of hashgraph) on hashgraph:
You know the consensus. You know that you know the consensus. You know that everyone else is going to agree with your consensus. Guaranteed mathematically – that’s where the byzantine fault tolerance purely asynchronous all comes in. You do this with zero communication. You get it for free and in a fraction of a second. That’s hashgraph.
The Future Of Consensus | A Panel Discussion With The Hashgraph Team At The Assemblage NYC
Edited and Consolidated TRANSCRIPT and AUDIO
The Future Is Not Blockchain. It’s Hashgraph
Panel hosted by Demetri Kofinas of Hidden Forces
Thursday, October 19, 2017
Notable quotes:
Jordan Fried (VP of Swirlds) on Leemon:
Dr. Baird is one of those guys you meet, and you know your life will never be the same after you meet him – he’s one of those brilliant minds. What he’s invented is a testament to that.
Mance Harmon (CEO of Swirlds) on hashgraph:
Hashgraph has security properties that are unmatched in the market. There is no other [consensus] algorithm in the market that is practical and achieves asynchronous byzantine fault tolerance.
Mance Harmon (CEO of Swirlds) on property of fairness:
We’re the only algorithm in the market that has a formal definition of fairness that is mathematically proven and guaranteed.
Mance Harmon (CEO of Swirlds) on getting credit union business vs. IBM and Hyperledger:
We were able to win against Goliath based on the strength of the technology – certainly, not based on the size of the company or anything of that matter. We were able to demonstrate real value in the [hashgraph] algorithm. The platform that we built solved fundamental problems that they were not able to solve with the existing platforms in the market today.
Mance Harmon (CEO of Swirlds) on hashgraph:
With hashgraph, we’re starting with the very best building block in building a scalable system which allows you to build a total system that is unparalleled in the market. If you start with the best bricks, you’re going to get the best house. Asynchronous BFT is the key to that ability to scale.
Mance Harmon (CEO of Swirlds) on Swirlds:
From our perspective, what Swirlds sells is a consensus server. In the same way that every company in the world today uses an HTTP (hypertext transfer protocol) server to serve up web applications, I expect that every company in the future will also use a consensus server to serve up distributed applications.
Jordan Fried (VP of Swirlds) on hashgraph fairness:
When I first introduce hashgraph, I like to introduce the property of fairness, in that we’re talking about a whole new genre and world of applications that will be made possible because of this technical breakthrough – it is really immense.
Mance Harmon (CEO of Swirlds) on Leemon’s invention:
I personally believe that Leemon has solved the problem of distributed consensus. One hundred years from now, there may be dozens of variants on the hashgraph, but they will be on the hashgraph. You cannot do better than asynchronous BFT, and you can’t do better than the bandwidth limit of transactions with two hashes.
Hashgraph: Unblocked, Unchained…Unmatched?
As Dr. Leemon Baird says, “let’s just see what the future holds…“
