By Stephen Tse, Founder and CEO of Harmony.one. Tse has been obsessed with protocols and compilers since high school. He reverse-engineered ICQ and X11 protocols, coded in OCaml for more than 15 years, and graduated with a doctoral degree in security protocols and compiler verification from the University of Pennsylvania. Stephen was a researcher at Microsoft Research, a senior infrastructure engineer at Google, and a principal engineer for search ranking at Apple. He founded the mobile search Spotsetter with institutional venture capital; Apple later acquired the startup.
Confucius said 2,500 years ago that “He who will not economize will have to agonize.” People who aren’t efficient with limited resources experience negative consequences.
Making Blockchain Sustainable
Distributed ledgers are entering its second decade of existence and may grow to $40 billion by 2025 by some estimates. According to a 2020 Deloitte survey, 55% of business executives say blockchain is a critical technology and among their organization’s top five strategic priorities.
Individuals, organizations and institutions are gravitating towards projects that possess pragmatic utility versus those that are promising but theoretical in application. Mainstream adoption, however, requires long-term planning.
Thus, Blockchain 2.0 must be scalable and sustainable in order to maintain its everyday usefulness to stakeholders. Aside from decentralized money (like bitcoin), which receives most of the press coverage, blockchain brings immense value in transforming entire industries, such as global supply chains for instance.
Companies like Walmart, IBM and Samsung have implemented processes that vastly improve security and transparency in record-keeping. These new practices replace slow, manual processes and strengthen traceability of goods.
Blockchain Bloat
In the beginning, developers focused on the technology’s decentralization and superior ability to secure transactions. In finance applications, it solved a token’s double-spending problem that proved elusive for decades.
But taking a long view -- over a span of decades -- there’s a serious problem regarding future performance and storage. Blockchains with a thriving ecosystem accumulate a massive amount of data that are cached in millions or more blocks.
This technical challenge is known as blockchain bloat.
Increasing throughput either requires a more centralized protocol or sacrificing security in some way. This phenomenon is known as the Blockchain Trilemma where a developer team must prioritize two out of three between decentralization, scalability and security. Any two will succeed but not the third.
Programmers are increasingly facing the challenge of how to permanently store blocks on-chain, as well as how to transmit and download the chain (among participant nodes) within a reasonable timeframe.
A huge increase in storage requirements leads to several technical difficulties. A network’s performance can become slow and unstable. For example, it can be extremely burdensome for a node to download an entire chain -- a necessary process (for some networks) to attain consensus and validate new transactions.
Achieving High Performance and Reliability
Scalability and sustainability require economizing of design and computation resources. The purposes of which are to achieve speed, performance and reliability over decades of accumulated data.
These are what current and future customers want.
According to a 2019 Deloitte survey, the top three use cases for organizations are data validation (43%), data access and sharing (40%) and identity protection (39%). Adoption rates are highest in technology and media (49%), energy (43%) and manufacturing (43%).
Today, average block times range from a few minutes to over an hour. Some say these time frames are inflexible or necessary. To be competitive in the broader marketplace, the technology must match end-users’ expectations.
I reject long-standing assumptions around block time limits. There’s immense promise of wider adoption by giving users block times of just a few seconds. Such speeds would be on par with Visa and MasterCard platforms which can process tens of thousands of financial transactions per second (TPS).
Near-Instant transactions are necessary for many individuals, large enterprises and token holders.
In the case of Harmony, our vision is to create a leap forward by enabling two-second block time (or transaction finality) with 1,000 nodes. We also introduced database sharding to increase transaction throughput while requiring less storage per node. Each shard has 250 nodes to guarantee security.
In comparison, the Ethereum network typically achieves transaction finality in about six minutes with more than 7,000 validators. In the past year, the network has seen high transaction fees which our project is designed to avoid.
Blockchain Trilemma and Bloat
Regarding the trilemma between scalability, decentralization and security, other projects that use delegated proof-of-stake (DPoS) such as EOS and Tron sacrifice both decentralization and security. This is done to achieve scalability by increasing transactions per second and by making transaction confirmations faster.
Sharding has been commonly acknowledged as the best solution to achieve blockchain scalability because it increases TPS and requires less storage for nodes. Sharding solves blockchain bloat without sacrificing too much on decentralization and security.
With Harmony, the 1,000 nodes network is highly decentralized compared to other blockchains that have only 10-20 nodes. Resharding and staking mechanism further enhance the network’s security.
Performance is not only about TPS, it's also about how fast a transaction can be confirmed. Our FBFT (Fast Byzantine Fault Tolerance) consensus algorithm along with BLS (Boneh–Lynn–Shacham) aggregated signature, as well as pipelining techniques achieved block finality within two seconds. This block finality relies on consensus within each shard and has nothing to do with sharding. FBFT is more like a performant engine, and sharding gives us multiple engines in the system.
A Competitive Marketplace
Instant confirmations are critical for adoption because, as mentioned above, decentralized innovations compete with traditional solutions in a hypercompetitive marketplace. There is compelling demand for high throughput and low latency networks.
To conclude, blockchain tech promises security through consensus validations. But it must deliver speed and reliability for consumers and organizations. It’s now about actual benefits, key performance indicators (KPIs) and return on investment (ROI).
Thanks to solutions like sharding, the tech is poised for continued growth. According to the same 2020 Deloitte survey, 88% of business executives say that blockchain is broadly scalable and will achieve mainstream adoption. And 86% say there is a compelling business use case for their organization.
As the industry matures, we’ll see great improvements as developers focus on creating a better user experience.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
