Posted By: Admin
On: October 29th 2017
Category: Entrepreneurship, Bitcoin, Finance
The cryptoeconomics of scaling blockchainsS
Before civilization humans did not understand the concept of the digit zero. By definition 0 "Zero" is both a number and the numerical digit used to represent that number in numerals. A lot of us can not define zero but agree that it represents "Nothing" in a more abstract way, that does not make "zero" irrelevant in todays world but it in turn adds unlimited value.
Just imagine if a multi million dollar company somehow accidentally wipes out a zero from its statement report, this would be a nightmare. Blockchain technology has a great chance of having a similar impact in the way businesses are coordinated between B2B and B2C, Cybersecurity and practically any other company looking to gain a competitive edge.
Now back to the topic - The entire Bitcoin network can only handle seven transactions per second, compared with over 2,000 transactions per second on the VISA network and millions of transactions per second handled by any top tier consumer application. Blockchain is useful because it allows untrusted and non-corporative parties to work together and maintain a system.
To solve blockchain’s performance and scalability problems, we must look into new ways to reach consensus among untrusted parties. We must innovate on cryptoeconomics. At a Cryptoeconomics and Security Conference (CESC) organized by Blockchain at Berkeley at UC Berkeley. A big part of the conference was about how to improve the design of consensus.
Proof-of-Stake (PoS) has been proposed as an alternative mechanism for consensus to PoW. PoS essentially allows existing token/coin holders to vote and reach consensus on new blocks containing transactions. Without the need to perform meaningless work to prevent attacks, PoS is much faster than PoW and can reach hundreds of thousands of transactions per second, making it suitable for consumer applications. However, PoS is also prone to centralization, as stakeholders could collude to alter transactions.
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