Blockchain Can’t Handle Its Success, Its Replacement Is Ready » Crypto Insiders

Crypto and blockchains are only used by 1% of the world’s population. However, the growth is exponential and that is a success that current blockchain systems cannot handle. You see this because systems become too slow or too expensive (gasoline parties) or even because they fall off completely. If blockchain wants to serve the other 99% of the world’s population, it will have to switch to something new.

In this blog I explain why we are changing to something else and what evolution awaits us.

Why should we change to something else

An important goal of blockchain technology is to ensure that the 1.7 billion people who currently do not have a bank account have access to financial traffic. This becomes ‘bank the unbanked‘ and ensure that those 1.7 billion, just like us, have access to the world’s economy and data. That goal can’t be achieved with systems that aren’t fast enough or cheap enough when scaled up. After all, if a transaction costs more than $1, it will only be accessible to a limited extent by a third of the world. Many transactions on the blockchain are even more expensive now.

Current blockchain systems cannot be further developed

Just a comparison. Blockchain systems are a bit like the Google Play Store/App Store. They are kind of basic layers on which programmers can build applications. In this case, the Google Play/App Store is the blockchain itself and the applications are the Dapps (decentralized applications) that are built on top of it. This building literally takes place on the bottom layer of a blockchain (the base layer). This base layer contains the rules that determine the blockchain. With blockchain we program (write) new rules on the internet. As a programmer, you can build layers afterwards. However, these layers will always have to comply with the rules of the base layer. This keeps a blockchain secure, but of course makes it difficult to develop.

Blockchain Trilemma

This trilemma contains three aspects: 1 security, 2 decentralization and 3 scalability. Scaling in particular causes problems for many blockchains. Bitcoin is getting too slow, Ethereum too expensive or even falling. Many ways have been devised to solve this scalability problem. Often packaging data to validate it differently, such as stacking, merging, slicing, and mixing data blocks for transport. This often involves the problem that this is at the expense of the security of sending this data. The more actions you take with the data, the greater the possibility of theft or influence (hacks).

Too much data traffic

You can think of the problem with scaling as a growing pool of data that has to travel down a highway and starts to get stuck at the control gate. Both the control mechanism of Work test (PoW) and proof of stake (PoS), which are used in current blockchains, do not provide a solution for a flow of data in the future size. By the way, the way data is verified with blockchain technology is not called verification, but validation. This validation occurs because many computers or randomly selected computers at the same time evaluate the data and its value in the same way and write the transaction (transition) to the blockchain. The fact that all computers make and describe the same evaluation at the same time is called consensus. But as described, this system is maxed out.

The solution

The solution can be a directed acyclic architecture (DAY). A DAG uses a completely different consensus mechanism. DAG is not a blockchain like Bitcoin (BTC) or Ethereum (ETH) where blocks are placed one after another. DAG is more of a web (spider) of nodes (blocks) that can communicate with each other simultaneously and play a role in validating the data being sent. Therefore, data transactions do not happen one after another as in a chain (blockchain), but are linked to different blocks that are placed in a network. With new transactions, new nodes are automatically created so that the system grows organically. This growth not only makes the DAG system bigger, it automatically becomes faster and more secure. There are more nodes that will help.

Self-cleaning system for greater safety.

The DAG network uses proof of respectable observation (PRO). PRO is a score that nodes get from state channels (companies) in the network. Each state channel monitors whether legitimate businesses are being built on the DAG network. State channels with a high score outperform those with a low score. In this way, users (state channels) from the DAG network for self-cleaning power. Possibly worse companies will lose their influence in the system.

All data from around the world

DAG claims, as described, that organic growth can make them faster, safer, and cheaper. They even claim to be infinitely scalable. With its first version of the network, DAG has shown that 6,000 transactions can be made in literally 1 second. The mainnet will go live in two months and it will be interesting to follow what happens then. Are they in fact infinitely scalable? They say they can handle all the data traffic in the world. That is a very big statement. We’ll find out if that’s the case.

Communicate with all the data in the world

In addition to claiming to be able to handle all the data, DAG claims to have a solution for the translation of all the different blockchains. This is important because one of the biggest problems with blockchain today is that you have all kinds of islands of data from different systems. The transfer of data or cryptography from one system to another has many drawbacks. For example, it may be technically complicated, insecure, or done through a bridge that is not decentralized. This can lead to leaks or hacks.

one step further

At DAG, they claim to have found a method that allows them to communicate with all blockchains and even all forms of data in the world! Therefore, they are not only linked to blockchain networks, but can also be linked to the data phenomenon itself. They have some kind of translation engine that as soon as it pulls data through their network, it automatically performs the translation to its own network. Therefore, they do not have to have a translation machine placed on another party’s network, like other systems. They say that they can extract data from the source and translate it automatically in their own system.

This applies to all types of data. So as soon as you have something to do with data, you can put and manage it on the DAG network. You can then have all forms of data available to you in a decentralized way, with its value embedded. You can own it, store it, trade it, send it, or trade it with someone else. Although I cannot fully understand all of the above, I do know one thing. If DAG can live up to its claims, it would be a revolution.

Learn more about the path to financial freedom

Do you want to read more about investing, financial freedom and FIRE? Visit our website and follow me on Instagram.

Are you interested in a FIRE master class and want to learn how to invest with less stress, leaving you with more time? In our FIRE masterclass we help you with the knowledge you need for a plan towards financial freedom. Use the discount code when registering CRYPTO FIRST for €25 discount.

Leave a Comment