Thirteen years ago, a cryptographer named Satoshi Nakamoto published a whitepaper in an obscure cryptography listserv outlining a new peer-to-peer (P2P) digital currency he called Bitcoin. Nakamoto’s creation — Blockchain — cracked the double-spending problem that had hampered the development and unveiling of digital currencies for decades.
Blockchain changed our perception of what constitutes money, including its storage and transfer of value. However, what makes Blockchain truly disruptive is its potential for applications outside the realm of Bitcoin transactions. Today, there are thousands of startups using Blockchain in areas such as payments, banking, supply chain, identity and reputation, and cybersecurity, among others.
Despite the many sectors that Blockchain has impacted, there are also issues about the technology that are still preventing it from going mainstream. By now, we expected the technology to have reached mainstream adoption the same way the internet grew in the 1990s and early 2000s.
According to Statista, the number of Blockchain users (as measured by Blockchain wallets) reached 70 million by the end of March 2021. This represents a paltry 0.9% of the world population, which currently stands at 7.9 billion as of February 2022.
In this post, we delve deeper to explore four main concerns stemming Blockchain from widespread adoption.
Blockchain Challenges
Stakeholders in the Blockchain sector must address many issues ranging from user experience to steep learning curves to push back from existing power structures before the technology is widely adopted. However, we believe that the sector will need to tackle the following four major hurdles to achieve mass adoption:
- Lack of an interoperability framework
Dozens of new Blockchain-based projects are emerging each year, with each project promising to develop the “best” Blockchain. The companies behind these projects often emphasize their products’ alleged “market-readiness,” arguing that their cryptosystems are more secure and scalable than their competitors.
Whether such assertions are factual or not, these projects represent stand-alone and disconnected Blockchains. The unveiled Blockchains entail different ecosystems, consensus protocols, hashing algorithms, and communities. Consequently, the Blockchain sector has increasingly become siloed, undermining decentralization, its core philosophy.
For example, the Ethereum network exists fully independent of the Solana Blockchain — in the sense that it has no knowledge of Solana’s consensus protocol or smart contracts. While existing bridges such as Neon EVM may allow Ethereum-like transactions to run inside Solana’s runtime, they do not offer full interoperability functionalities.
For example, Solana’s runtime restricts the resources that Ethereum-like transactions need because of the need to optimize hardware usage. This situation doesn’t portend well for the sector. Let us consider a world where Blockchain actually goes mainstream.
Now, suppose a patient — whose healthcare records are stored in Blockchain A — needs to be transferred to another hospital using a different Blockchain, say B. If the two Blockchains are not interoperable, the referred hospital cannot access the patient’s medical data. Because of the interoperability problem, many hospitals are reluctant to adopt Blockchains.
- Lack of scalability
Legacy transaction networks usually process thousands of transactions per second (tps). Visa, for example, can process an average of 1,700 tps. Meanwhile, Bitcoin can only handle a paltry 5 tps, with Ethereum handling roughly 15 tps. The sluggish transaction speeds in public Blockchains such as Bitcoin and Ethereum is a major concern for companies that rely on high-performance legacy networks.
Because of performance issues, Bitcoin and Ethereum are facing stiff competition from emerging Blockchains like Solana which can process as high as 65,000 tps. Despite the massive speed, Solana has suffered a series of outages in the recent past and the network is less decentralized than Bitcoin and Ethereum. This makes it more vulnerable to security hacks and issues.
In a proof-of-work (PoW)-powered public Blockchain, the network broadcasts all the transactions and blocks, validates them, and stores them in each node in a decentralized and P2P fashion. This process ensures that the entire chain is stable, immutable, and secure as long as more than half of the nodes are honest.
However, achieving an honest majority is costly on the scalability side because all nodes need to agree about the status of the ledger. Scalability is not such an issue in permissioned Blockchains because the network purposefully selects nodes to validate blocks in a trusted environment.
However, while permissioned Blockchains may make business sense because of high throughput, these networks’ scalability often comes at the cost of sacrificing security and decentralization.
- Lack of regulatory clarity
Regulatory regimes have always struggled to keep up with developments in technology, and Blockchain is no exception. One of the hurdles of Blockchain (which is also its original motivation) is that it eliminates oversight. Even though many organizations are increasingly using Blockchain to transact, two key regulatory issues remain unresolved.
The first is that nodes in a decentralized network can span multiple jurisdictions. This makes it difficult to establish which authorities’ laws and regulations can apply to a given decentralized application (dApp). There is a risk that transactions undertaken by one company could fall under every jurisdiction where the decentralized nodes are situated, resulting in overwhelming regulations and laws that could apply to transactions in such an ecosystem.
The second is that crypto-assets appear to be difficult to regulate. The challenge for regulators largely lies in classifying crypto assets that exist, with many arguing that they represent an entirely new asset class. While this classification may be true of tokens that operate like securities, utility tokens are not the case.
For example, under the “Howey Test” framework, utility tokens cannot qualify as securities because they function far more like promotional tools and do not grant ownership stakes in the organizations. Moreover, you cannot classify all tokens as securities because they can simultaneously work across multiple classes: as cryptocurrencies, as traditional securities, or as voting instruments, among others.
- Lack of privacy
Blockchain was unveiled to facilitate P2P transactions without the need for a trusted intermediary. In a permissionless Blockchain, no single entity takes responsibility for the network’s security or availability, and all nodes can access the stored transactions and even write to the ledger.
These features conflict with privacy and data protection measures, which require the controller and processor to safeguard the security and confidentiality of data on behalf of users or “data subjects.” For example, under the general data protection regulations (GDPRs), both controllers and processors have distinct obligations to safeguard privacy.
In a Blockchain environment, parties that submit personal data and transactions to the network are more likely to be deemed controllers under the GDPR as they determine processing aspects. Similarly, validators or miners that process the transactions are more likely to become processors because they facilitate the network’s operations.
Achieving privacy in such an environment is impractical because the system verifies transactions by chaining the personal details (sender’s and recipient’s addresses) and input/output values on the chain. Because the addresses records are public and pseudonymous, any user can derive personal data from them.
What Is the Analog Network Trying to Solve?
Blockchain has made tremendous strides and widespread adoption in recent years. Its impact can only be compared to that of the internet. However, mainstream adoption of the technology is still a mirage. At Analog, we believe Blockchain can only make a meaningful impact if interoperability, scalability, and privacy issues are addressed.
Our primary goal is to create a layer-0, cross-chain platform that powers the next generation of time-based dApps. We believe that interoperability is inevitable because there is no one-size-fits-all platform when it comes to Blockchains, not even Analog. As a fully decentralized network, the Analog network will complement both new and existing Blockchains, allowing them to seamlessly exchange value.
Aside from interoperability, the Analog network is also scalable. Our proof-of-time (PoT) is unlike any other in the industry. In PoW-powered Blockchains, for example, miners must expend high computational resources to confirm blocks in the network in an unfair process.
In Analog, every online user who possesses $ANLOG tokens and has a high ranking score can propose blocks. Users do not utilize their spending keys (i.e., keys that manage their coins) for block proposal and consensus to minimize exposure. Instead, any user who wants to propose or confirm blocks generates a participation key. Using the participation key ensures that users’ $ANLOG coins remain secure even if the participating time nodes get compromised. What differentiates the PoT from other consensus protocols is that any node can propose and confirm blocks provided it has a higher ranking score and has staked a fixed amount of $ANLOG tokens that the protocol specifies. The protocol uses a verifiable delay function (VDF) which behaves similarly to a weighted lottery process to determine which nodes validate and confirm event data. It is as if every $ANLOG in an account generates its own lottery ticket in a self-selection process to propose or confirm blocks. The VDF protocol also ensures that the Analog network has minimal latency.
Besides scalability, Analog is also privacy-oriented. The platform also uses zero-knowledge scalable transparent arguments of knowledge (zk-STARKs). This is a highly secure cryptographic protocol that uses zero-knowledge proofs (ZKPs) to create encrypted data that users can easily share without worrying about their privacy. We believe the use of zk-STARKs on the Analog platform guarantees security even under quantum computing environments. Most importantly, the platform is interoperable. Analog is an Omni-chain platform where validated event data can flow seamlessly through all platforms. Unlike multi-chain ecosystems where multiple networks connect to a single chain such as Ethereum or Solana but not to each other, Analog is a genuine interoperable solution that ushers in a new era of cross-chain, time-dependent dApps.
Learn more about the Analog network from the links below:
Website: https://www.analog.one
Reddit: https://www.reddit.com/r/AnalogToken/
Medium: https://medium.com/@analogtime
Facebook: https://www.facebook.com/analogpost
LinkedIn: https://www.linkedin.com/company/analogone
Youtube: https://www.youtube.com/analogoneofficial
Twitter: https://twitter.com/OneAnalog
You can also join the chat and learn more about the Analog network from the following community channels:
Telegram: https://t.me/analogtimer
Telegram (Announcements): https://t.me/analogannouncements
Discord: https://discord.gg/jacDmeyQge
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