By Dr. Byung Ik Ahn, CEO of Fantom Foundation
As we quickly approach Bitcoin's 10 year anniversary, enthusiasts and critics alike have begun to analyze blockchain's evolution: from its inception and tremendous rise to the current state of the industry. While conversations around regulatory uncertainty and market fluctuations have often dominated the narrative, scalability concerns remain very much at the forefront of the blockchain industry, as issues with complexity, limited speed, and increased expenses have prevented the technology from making its way to the mainstream. So what does the future hold for distributed technologies, and what might be a solution to blockchain’s growing pains?
Directed Acyclic Graphs , also known as DAGs, may have emerged as the answer.
The evolution of blockchain: From Bitcoin to blockchain 3.0
After the 2008 financial crisis, trust towards centralized banks and financial institutions reached an all-time low. Critics stated that banks had caused the economy to collapse, which fueled an individual, or individuals, under the name of Satoshi Nakamoto to publish a paper which we now consider to be the inception of Bitcoin. In 2009, the very first code for bitcoin was published and the genesis block was generated to commence the mining of bitcoin.
As the years passed by, many developers caught wind of bitcoin and created competing coins, or altcoins, with varying alterations of its DNA. Altcoins sought to improve the original concept of a decentralized currency by increasing throughput and providing anonymity, among other things.
In 2013, Vitalik Buterin proposed a public blockchain-based distributed computing platform and operating system that could support smart contract functionality. This platform, called Ethereum, was funded by an initial coin offering (ICO) in 2014 and went live in July 2015, marking the beginning of the second embodiment of blockchain technology. Fast forward to present-day and Ethereum is now the second largest cryptocurrency in the market, boasting one of the largest developer communities in all of crypto.
Struggling to cope with high network load and the low throughput of Ethereum and Bitcoin, the entire industry has been searching for a solution to the slow transaction speeds of existing blockchains. Whereas many Ethereum believers and Bitcoin maximalists are doing what they can to scale on top of the two currencies or platforms, other developers have been at work to create new distributed ledgers that could potentially decouple Bitcoin and Ethereum from the spotlight.
One such technology to combat these concerns is Directed Acyclic Graphs (DAGs) . Although not entirely blockchain technology, DAGs are often regarded as the younger sibling of blockchain or blockchain 3.0. With the capability of improving the low throughput, high costs, and compromised security that have plagued existing platforms, DAGs address many of the long-standing issues that have hampered the mainstream adoption of decentralized technologies.
Leveraging the inherently scalable nature of DAGs, projects are now able to manage hundreds of thousands of transactions per second while maintaining nearly instant finality and watertight security. Due to the absence of miners in DAG architects, these next-generation projects are also free of potential centralization, as transaction fees remain minimal.
The road to mainstream adoption
With the explosion of interest in cryptocurrencies, many would say that the mainstream adoption of blockchain technology is imminent. However, a large portion of this interest lies in the speculative element of cryptocurrencies rather than the underlying technology.
To achieve mainstream adoption and implementation, projects will have to find the right partners in relevant industries to build out more than just a computing platform or a protocol layer. Where most ICOs have raised money to create new protocols, projects will need to become more focused on creating or finding the right ecosystem for their project. By leveraging on partnerships with large corporations and businesses in industries with relevant use cases, an emphasis will need to be placed on building platforms that both consumers and enterprises will be able to use in their day to day lives going forward.
From Fantom’s perspective, some of the best potential use cases lie in food-tech, supply chain management, traditional finance, energy, and point-of-sale (PoS) processing. By partnering with businesses in each respective industry on a local and global scale, and considering the different regulatory stance between regions, the prospect of growing a more sophisticated, global blockchain ecosystem grows better by the day.
Currently, South Korean cities such as Seoul and Busan are paving the way towards becoming global smart cities, with existing ‘crypto valleys’ such as Zug in Switzerland and Malta also advocating for use cases that people can use in everyday life. However, it’s not only entire cities or regulatory bodies that will enable the industry to progress to the mainstream: adoption from large corporations such as Microsoft, Hyundai, SK Telecom, LG U+, Kakao, and dedicated blockchain consortiums, like the Open Blockchain Industry Association (OBCIA), will also play a key role.
Why 2019 may be the year of the DAG
As the industry makes major strides towards adoption, putting forward the best possible technology will play a critical role in whether or not projects find success in today’s crowded market.
Projects like Byteball, Fantom, and IOTA are validating that alternative technologies such as DAGs offer strong competition to traditional blockchains.
The key to succeeding in today’s evolving market, whether that comes from DAG technology or otherwise, will be whether or not projects can effectively provide a solution to blockchain’s weaknesses — and those that can do so first.
Based in South Korea, Fantom is the world’s first DAG-based smart contract platform that solves the scalability issue that has long plagued existing public distributed ledger technology. Built on Fantom’s OPERA Chain, the Fantom platform will replace existing payment methods and supply chain management infrastructures using a dApp that will handle hundreds of thousands of transactions per second across all industries, including food, telecommunications, finance, electricity, electronics, real estate, and autonomous vehicles, saving costs and providing transparency.
For more information, visit: fantom.foundation .