The Holy Grail of Crypto: Reaching Visa’s Transaction Speed
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Improving transaction speed is necessary for crypto to pass the test of time. Since blockchain is a technological improvement, its demise is not likely to occur. Another possible scenario is that crypto will become what it genuinely is – a means of cryptography.
As the oldest cryptocurrency, Bitcoin has a transaction speed that is way too slow. In this case, slow means seven transactions per second (TPS) as its record high. On the other hand, Ethereum is a bit faster (20 TPS) but prone to crashes since it is unscalable. Both are seemingly irrelevant when compared to Visa’s 24,000 transactions per second.
Since improving transaction speed has yielded new, innovative concepts, the quest itself is a valuable one. Similar to groups of companions seeking the Holy Grail, many have embarked on this adventure. New crypto platforms, as well as off-chain theories, have emerged.
As the legends fade, time is of utmost importance. However, like a strike of lightning, the solution could hit the blockchain world. As the Lightning Network is losing momentum, what existing solutions can pave the way for future innovation?
Off-Chain Transaction Speed
Unlike “block time” that is unchangeable, the transaction speed varies. This is because a new block is added to the chain every 10 minutes in Bitcoin and every 14 seconds in the Ethereum network. Similar to real-life traffic, transaction speed can depend on a rush hour or construction on the road.
In order to avoid “congestion,” some solutions approve payments before blockchain verification. These solutions are “off-chain”, offering higher transaction speed. Usually, “off-chain” means settling via:
- Contract or agreement
- A third-party guaranteeing the payment
- Coupon-based payment
The main advantage of blockchain also holds the seed of disaster. Therefore, off-chain uses it scarcely. Since it is a typical off-chain solution, the Lightning Network uses smart contracts without blockchain transactions. Therefore, transaction speed is counted in milliseconds, not seconds.
No solution is as optimistic as Lightning Network, offering millions of transactions per second. However, there are other off-chain solutions worth mentioning.
Plasma is a simple solution that composes blockchains as a tree. As off-chain validation is confirmed within a branch, it is similar to a family tree. Consequently, the key is the validity of the root blockchain as a common ancestor.
Similar to Plasma, Cosmos is a network of blockchains with a central “hub” blockchain. Unlike Plasma, the blockchains are parallel to each other following the same consensus algorithms.
On the other hand, Raiden Network is avoiding the bottleneck of consensus. Exclusive to Ethereum, Raiden Network is an experiment in enabling instant and low fee payments.
Instead of a tree, Polkadot features “pooled security.” Validators secure multiple blockchains, rewarding honest players and taking possessions from bad actors.
The transaction speed comparison report shows that the platform Ripple was almost 10x faster than PayPal. Although not yet even close to the transaction speed of Visa, Ripple did take second place. Will its alternate-thinking improvement, Stellar, take first?
Although lagging in its integration with Lightning Network, Stellar is refurbishing the previous solution. Furthermore, it features smart contracts, multi signatures, and a database that needs 3 to 5 seconds for confirmation.
Due to performance and ease of use, many joined Stellar in its quest. Seemingly, DApp developers claimed that they could create tokens within a day. Besides DApps, different industries build upon Stellar.
Stellar does not insist on using its own cryptocurrency – Lumens. Banks, investors, and ordinary people can use fiat, Bitcoin, Ethereum, or any other cryptocurrency. Because Stellar is featuring a different way of thinking, similar solutions are using the Stellar platform to finish their noble quests.
The digital advertising industry, but this time built with privacy. According to the MAD website, their quest is to “realign the industry to incentivize truth and transparency while protecting consumer data privacy.”
This crypto wallet with the safest 2FA and multi-signature support is built to support humanity, too. Bitfoilex social media presents one of its uses as “a financial platform to enable payments for humanitarian aid.”
The stellar way for purchasing art, digital content, music streaming, VOD films, books, or event tickets. In this case, artists created Kult for other artists as a cultural exchange. The final goal of Kult is to become a crypto cultural bank of the future.
Seemingly, this is an altruistic solution for providing help to immigrants. SureRemit is reconnecting them with merchants that provide services for their families back home. By enabling payments with crypto, they help them cope with the situation they face.
A security token that is helping businesses. Even though it is from Germany, the secure and stable token is available worldwide. After a successful ICO, “BB1” says it will send the first payment to their initial supporters on October 1, 2019.
As the quest for overcoming Visa’s transaction speed continues, we will witness more and more solutions. Overwhelmed by innovative developments, Bitcoin and Ethereum are desperately searching for faster transaction speeds.
Similar to DIY, data scientists use proven concepts to integrate these ideas with blockchain technology. The new-old model is sharding for managing databases that can split the blockchain, too.