Bitseven.com – In June 2018 Bank of International Settlements (BIS)
published a statement of 24 pages that cryptocurrency cannot function as
traditional money due to its unscalability and that’s why it’s not going to be
a common trading value in global economy. BIS is an organization located in Switzerland consisting of 60 Central Banks in the world. They put their blame on 3 shortcomings – scalability, price volatility and trust for payment
completion, that won’t allow mass adoption of crypto. Most of their statements could have been an argued on, but scalability still is the weak point of blockchain and digital currency which is the fact hard to deny.
BIS also criticizes decentralization as its downside rather than strength. While creating decentralized network is cheap, the cost for its maintenance is much higher. Always increasing users nodes require a need for constantly increasing calculation resources. Moreover, according to the research conducted by scientists of Imperial College William Knottenbelt and Zeynep Gurguc, for mass adoption cryptocurrency is faced against two main obstructions: working as trading value and as the legal measure of value in economic system.
“Cryptospace is evolving as fast, as vast collection of its confusing terminology that comes alongside. These decentralized technologies could destroy everything we knew about the nature of financial systems and financial assets,” – commented Knottenbelt.
So the industry switched its focus on developing solutions to scalability threats. Many new applications are on the development stage trying to provide effective blockchain-based network scalability and satisfy increasing demand for technologies. Such project as Plasma, Zilliqa and
Aion offer their own solutions of this problem.
One of the oldest and most perspective solution for scalability problem is sharding or segmentation. Basically segmentation means splitting big data sets on smaller ones, which are then processed individually and regrouped in the initial set. This helps on making transactions faster and increase scalability. The goal is to beat in number of transactions commercial giants, such as Visa while not damaging decentralization. Visa processes more than 24000 transactions per second (TPS). While Ethereum – 15.6 TPS and BTC –
Second solution for scalability problems are protocols, built on the base of blockchain and, which have to sacrifice part of security measures, to potentially keep up with Visa TPS numbers. This solution assumes having the system being less responsible of security which means the user himself will have the control of his cryptocoins with the use of this solution’s tools.
With all this being said, we can reach the conclusion that people are still trying to free themselves from banks chains with the cryptocurrency acceptance. Not even the unending beartrend had made majority of the community lose faith – many investors still believe. News of some new way for application of Blockchain technology getting come everyday and it won’t be surprising if we’ll see something space-related soon. And the struggle against this main scalability problem is still ongoing and maybe soon we’ll come to some kind of solution or a decent compromise. So it is very likely that one day cryptocurrency will be able to take head on traditional money and their lair, banks.