Blockchain Companies Still Need to Overcome Their Fatal Flaw

As Bitcoin soars to new heights, blockchain companies are also seeing a boon in business. A quick perusal of the top blockchain companies and ICO lists shows how rapidly the industry is expanding. There are over 1,300 coins in circulation with a combined market cap of over $500 billion–and it doesn’t look like things will be slowing down anytime soon.

However, blockchain companies still need to overcome their fatal flaws–blockchain bloat and scalability. A summer 2017 report noted that the Ethereum blockchain bloat could reach 1TB in 2017. And with the year winding down in a couple of weeks, it wouldn’t be surprising to see. A quick reddit search shows that some users are experiencing problems with their computers simply because of the size of the blockchains they are trying to download. 

As more and more transactions are executed through blockchains, the transaction logs will continually grow. The inability of many blockchains to scale and accommodate larger blocks doesn’t bode well for the industry’s long term viability.

In order to combat these problems, some blockchain based companies are creating platforms that attempt to solve scaling problems. These platforms are part of an up-and-coming segment in the industry–the concept of Blockchain-as-a-Service (BaaS).

What is BaaS and How Does it Help?

The phrase “Blockchain-as-a-Service” is popular in the industry, but what exactly does it mean? Fundamentally, BaaS platforms implement blockchain technology to act as a support or foundation for other tasks. Thus, rather than acting primarily as a medium of an exchange or an alternate way to make payments, BaaS platforms use distributed ledgers to accomplish key functions.

The BaaS model is particularly helpful for companies that want to track and secure data. Both IBM and Microsoft have launched BaaS initiatives integrated with their cloud based services. By intersecting blockchain technology with everyday operations, corporations can add a level of security and verifiability that was previously unheard of.

The problem with many BaaS platforms is that they too lack the ability to scale. So, even if the blockchain infrastructure is in place and operates correctly, it can’t necessarily prevent blockchain bloating. This is particularly true of companies like Microsoft that use the Ethereum network.

The Long Term Solution for Blockchain Scalability

Sensing a need for true scalability, the Jelurida group is working on their second platform, Ardor. The platform operates on a BaaS model that uses a parent chain in conjunction with several different child chains.

The model’s parent chain is purposefully small. Its main objective is to guarantee the security of the entire network, including the child chains. The platform’s additional functions will all run on child chains, allowing the blockchain to streamline processes and scale rapidly. Because the parent chain is built for security and other operations can be executed through child chains, blockchain bloat will decrease dramatically.

The brilliance of the platform is that it allows companies to create their own projects off of the platform in the form of child chains. They can be pruned without affecting the security of the parent chain while also allowing transactions to be paid in any child token, rather than the parent chain’s token. This gives companies the opportunity to still run as unique, autonomous entities while also enjoying the security of the parent chain. All chains will run smoothly because the architecture of the BaaS platform is designed to solve the bloat issue.

Additionally, the platform utilizes the Proof-of-Stake (PoS) consensus method as opposed to the costly and energy inefficient Proof-of-Work (PoW) protocol. This is particularly important to startups who want to implement blockchain technology but may have a hard time due to the high costs associated with PoW mining. PoS mining is also the preferable method in places where government regulators could crack down on blockchains’ high energy consumption.

Those who are new to blockchain technology can rest assured that the implementation curve is very shallow. The platform integrates well with APIs and is built in Java, resulting in an easy-to-use application. In light of these factors, it is quite likely that more companies will begin using BaaS models to improve their business operations.