{"id":621096,"date":"2023-03-23T11:49:36","date_gmt":"2023-03-23T16:49:36","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/03\/23\/public-blockchains-the-other-option\/"},"modified":"2023-03-23T11:49:36","modified_gmt":"2023-03-23T16:49:36","slug":"public-blockchains-the-other-option","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/03\/23\/public-blockchains-the-other-option\/","title":{"rendered":"Public blockchains\u2014the other option"},"content":{"rendered":"
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This post was first published on\u00a0Medium<\/a>.<\/em><\/p>\n

The case for private blockchains<\/strong><\/p>\n

An associate recently posted an article\u00a0here<\/a>\u00a0on Medium illustrating the positive impacts of several\u00a0private blockchain<\/a>\u00a0implementations. He also challenged proponents of public blockchains to present implementation options for clients based on facts and not hyperbole. This article attempts to do that by examining several inherent\u00a0limitations<\/em>\u00a0of private blockchains while still maintaining that clients always evaluate private as well as public blockchains for their specific enterprise use cases.<\/p>\n

Public blockchains: The scaling issue<\/strong><\/p>\n

First of all, let\u2019s get straight to the\u00a0scaling<\/a>\u00a0issue. It is an issue that has bedeviled popular public blockchains since their inception. Given their abysmally low\u00a0transaction throughput<\/a>\u00a0(average of 7 TPS), it isn\u2019t feasible for enterprises to run mission-critical applications directly on top of the two most well-known blockchains: BTC and ETH. They simply do not scale on-chain.<\/p>\n

Rather than addressing on-chain scaling issues, core development teams of both blockchains have opted instead to offload an increasing number of transactions to Layer 2 (L2) or off-chain solutions. Bitcoin Core (BTC) utilizes the\u00a0Lightning Network<\/a>\u00a0for scaling\u00a0micropayments<\/a>. Ethereum (NASDAQ: ETH<\/a>) transactions are diverted to the\u00a0Polygon<\/a>\u00a0(NASDAQ: MATIC-USD<\/a>) chain in addition to\u00a0other L2<\/a>\u00a0chains that charge lower gas fees. Several of these L2 blockchains leverage creative Web3 infrastructure platforms like\u00a0Alchemy<\/a>\u00a0to further scale.<\/p>\n

With respect to BTC and the Lightning Network, this approach merely addresses a single use case\u2014micropayments. And even then, it\u00a0doesn\u2019t work<\/a>.<\/p>\n

While BTC is a non-viable blockchain for virtually all enterprise use cases, Ethereum at least supports the issuance of ERC-20 tokens and NFTs (ERC-721\/ERC-1155). Like BTC, however, ETH is a poor choice for enterprise use cases needing to process thousands or millions of daily transactions. It seems then to beg the essential question: if there is no scalable on-chain utility with respect to either BTC or ETH, should enterprises even consider them for mission critical use cases?<\/p>\n

If the scaling limitations quantified above aren\u2019t enough to dissuade companies to look elsewhere, the L2 networks that BTC and ETH leverage should. These networks add unnecessary complexity, security, and governance risk to any implementation. Governments and highly regulated industries, such as finance, healthcare, food, and drugs, etc., are unlikely to ever consider running mission-critical applications on these chains, given the associated risks mentioned above. If such participants don\u2019t dare or cannot run their mission-critical applications on the two most popular public blockchains and associated L2 networks, then what public blockchain options remain?<\/p>\n

Enter Solana (NASDAQ: SOL-USD<\/a>) and\u00a0Bitcoin SV<\/a>\u00a0(BSV). Both Solana and BSV purport to be able to process up to or in excess of 50,000 TPS, with theoretical limits well beyond that. Additionally, actual TPS on both chains now surpass that of the Visa (NASDAQ: V<\/a>) network, which daily processes around 6,000 TPS. Solana, however, has been plagued throughout its short history by several network-wide outages lasting up to a few days. Some critics have argued this is due to\u00a0flaws<\/a>\u00a0in its basic design. In addition, its association with\u00a0FTX<\/a>\u00a0and dubious governance practices (coin issuance<\/a>) should give governments and enterprises pause when evaluating whether to deploy enterprise use cases on top of it.<\/p>\n

BSV, on the other hand, is currently the only\u00a0viable<\/a>\u00a0and most energy-efficient PoW blockchain, achieving among the highest TPS throughput and lowest transaction costs of any blockchain in existence. With the introduction of\u00a0Teranode<\/a>\u00a0in 2023, actual throughput may exceed 1 million TPS, further lowering energy use and fees\u00a0per transaction<\/em>. Once Teranode is released, no other blockchain will likely be able to match its capabilities. Finally, there has never been a reported outage on the network, even during major upgrades, since the base protocol is stable or \u201clocked in stone<\/em>\u201d (i.e., no future protocol upgrades expected\u2014or needed).<\/p>\n

Limitations of private blockchains<\/strong><\/p>\n

Limitation 1: The network effect<\/strong><\/p>\n

In the article referenced above, the author enumerates three criteria of successful private blockchain implementations, the first being a network effect. In the example provided, a dominant firm uses its clout to influence other participants to join the private network vs. \u201cincentivize\u201d them like miners as proposed in Section 6 of the\u00a0Bitcoin White Paper<\/a>. This is a key distinction between the two types of blockchain implementations and impacts the long-term ability of a network to scale.<\/p>\n

It\u00a0is<\/em>\u00a0conceivable that the dominant firm may persuade other companies to join the network by offering incentives, but such incentives are very likely to be tailored to each participant and inconsistent from one to the next. Over time, this becomes untenable even for the dominant company (as may have been the case with the abandonment of the Maersk\u00a0TradeLens<\/a>\u00a0offering), thus negating the long-term benefits of the private network effect.<\/p>\n

Another obvious limitation in private blockchain implementations is that each participant must invest in and maintain redundant infrastructure. By leveraging highly scalable public blockchains instead, such investments are greatly minimized or eliminated altogether. Participants simply pay minuscule per transaction fees as network use increases. Over time, there is a greater likelihood that highly scalable public blockchains, not private blockchains, will increase participation due to\u00a0lower<\/strong><\/em>\u00a0overall technology costs and complexity and\u00a0increased<\/strong><\/em>\u00a0efficiencies.<\/p>\n

Limitation 2: Data security\/sensitivity<\/strong><\/p>\n

The author asserts that enterprise \u201ccomfort with making data visible across the network<\/em>\u201d is a critical success factor for private networks. Further, the data should be of low sensitivity.<\/p>\n

While the foregoing may be true on private networks, there are\u00a0no such limitations<\/a>\u00a0on many public networks. One popular method to enhance privacy is smart contracts. These are ideal for concealing sensitive enterprise or consumer data but can pose a bit of a challenge for tracking and investigations by law enforcement.<\/p>\n

zk-SNARKs<\/a>\u00a0are another method for enhancing transaction privacy and have a long track record of being integrated into smart contracts or even blockchains (e.g., Monero, Zcash).<\/p>\n

One of the simplest methods to improve privacy is to use a\u00a0different address<\/em>\u00a0for each transaction. BSV wallets do this by default. This feature can be combined with other methods discussed to further enhance privacy.<\/p>\n

Last, the integration of\u00a0IPv6<\/a>\u00a0into blockchains like Bitcoin SV will usher in a new era of privacy and security by establishing P2P, secure payment channels using Simple Payment Verification (SPV) mentioned in Section 8 of the\u00a0Bitcoin White Paper<\/a>. It will also enable secure machine-to-machine or\u00a0IoT<\/a>\u00a0payment channels.<\/p>\n

Limitation 3: Efficient payments processing<\/strong><\/p>\n

This is an interesting assertion to make with respect to private blockchains. The author doesn\u2019t give any specific details on successful implementations nor am I requesting any at this time. It\u2019s common knowledge that cheap or free P2P payment processing options have proliferated in the fiat realm (e.g., Venmo, PayPal, Zelle, etc.), but I wasn\u2019t aware of any cheap or free B2B options running on private blockchains.\u00a0So<\/strong><\/em>, I went looking for some.<\/p>\n

One traditional payment network, Mastercard (NASDAQ: MA<\/a>), boasts openly on its\u00a0website<\/a>\u00a0that its solution, Mastercard Blockchain, \u201cfacilitates new commerce opportunities for the digital transfer of value by allowing businesses and financial institutions to transact on a distributed ledger. Our technology can power multiple use cases and can help take time, cost and risk out of financial flows.<\/em>\u201d<\/p>\n

This is an impressive claim, especially on\u00a0cost.<\/strong><\/em>\u00a0It comes from one of the two largest incumbent payment networks. The lowest category of fees shown on their website is for\u00a0grocery<\/a>\u00a0merchants (1.65%). Consumers and enterprises alike should ask themselves one basic question: How on earth could Mastercard, or VISA for that matter, offer merchants or consumers transaction fees even approaching the minuscule transaction fees now levied on a public blockchain like BSV? \u2014 currently around\u00a01\/1,000th<\/a>\u00a0of a penny. Fees this low would simply break business models for traditional payment networks like Visa, Mastercard, or even\u00a0Stripe<\/a>\u00a0and\u00a0Square<\/a>\u00a0(Block).<\/p>\n

But could Mastercard truly be transforming itself into a blockchain payment network? Unlikely. Rebranding a private payment network as a blockchain network is simply a clever marketing gimmick (e.g., Block). Business models of private payment networks like Mastercard, Visa,\u00a0SWIFT<\/a>, and others have come under existential threats due to public blockchains like BSV and their rebranding efforts as blockchain networks are looking more and more like final acts of desperation. They may all need to entirely transform their business models\u2014in effect, become miners\u2014in order to survive, or they may simply disappear altogether.<\/p>\n

Wrapping up<\/strong><\/p>\n

While the goal of this article has not been to offer specific implementation guidance, I\u00a0can<\/em>\u00a0suggest technology platforms and tools as viable options for enterprises willing to investigate public blockchain options like BSV. I follow developments more closely on this specific blockchain, but there may also be comparable solutions available on other public chains. Fully implemented enterprise use cases on BSV include\u00a0Track and Trace, tokenization, smart contracts, and blockchain as a service (BaaS).<\/em><\/p>\n

Many Web3 consultants like me are starting to see a big uptick in client interest around Track and Trace.\u00a0UNISOT<\/a>\u00a0offers a complete, vertical supply chain solution, including a Track and Trace module and a slew of other logistics features. To my knowledge, nothing like it exists on any other public blockchain.<\/p>\n

Tokenized<\/a>\u00a0offers an award-winning all-in-one tokenization solution for institutions, government agencies, enterprises, and individuals.<\/p>\n

Relysia<\/a>\u00a0offers a robust BaaS platform that entities can leverage to quickly spin up proof of concept applications.<\/p>\n

And finally,\u00a0sCrypt<\/a>\u00a0offers a state-of-the-art smart contract platform that now allows developers to use\u00a0TypeScript<\/a>, as well as a smart contract\u00a0transpiler<\/a>\u00a0that will even allow Solidity developers to port their scripts to run on BSV. These are just a few of the\u00a0many<\/a>\u00a0solutions available on BSV to help clients quickly and easily investigate and leverage public blockchain capabilities.<\/p>\n

In conclusion, Web3 consultants should encourage clients to evaluate both private and public blockchain options before making a decision that might impact their business performance for years. Unfortunately, most clients are not aware of the solutions now available on public blockchains and may all too often be guided towards private blockchains by consultants and advisors who themselves are not current\u2014or comfortable\u2014with the rapidly evolving capabilities in the public realm. The essential role of any good consultant though is to present solution options that they can actually deliver for the client and then let clients make the final decision.<\/p>\n

Watch: BSV Blockchain A World of Good<\/p>\n