Problem Pick 2 out of
- Decentralized
- Secure
- Fast
Bitcoin chooses
- Decentralized
- Secure
But loses ‘fast’
Bitcoin’s proof of work limits it’s throughput to 3-7 transactions per second This is already showing as too little.
A lot of energy is wasted in bitcoin
Proposed solutions
- [bitcoin cash] Increase blocksize
- Proof of stake (instead of proof of work)
- [eos] Delegated proof of stake (DPOS sacrifices decentralisation)
- [ripple] transfer ‘I owe you’ (centralized)
- [stellar] stellar consensus protocol
- Side-chains (secondary layer for lower cost and higher speed)
- Off-chains (move entire computation outside blockchain)
- [lightning] Offchain state channels (part of the blockchain is locked by a smart contract that requires 100% consensus, then is transfered back to the blockchain and the state channel is closed)
- Offchain computations
- [plasma] only block headers in main chain
- Etherium sharding
- Decentralized storage