Is Blockchain Obsolete? What are the alternatives?

Introduction:

For over a decade now, the concept of blockchain and its underlying distributed ledger technology has captivated innovators and entrepreneurs with its transformative potential. On a fundamental level, blockchain offers a new paradigm for distributed consensus without central control, enabling robust digital record-keeping across diverse parties on an open network. Its earliest implementation, Bitcoin, demonstrated the viability of crypto assets existing and transacting outside legacy banking systems.

Nevertheless, there have been questions about its viability, especially compared to its alternatives. In this article, we will explore what blockchain has accomplished, its strengths and its weaknesses. Then, we will evaluate some of its competitors to better understand what the future of these technologies might look like.

Chain 1: Blockchain’s Achievements

Blockchain technology has an impressive resume spanning a myriad of uses. Some examples which we have previously investigated are cryptocurrencies (like Bitcoin), stablecoins and decentralised finance. Beyond finance, healthcare companies now leverage its transparency for tracking drugs from production to patient use. This secures supply chains against dangerous counterfeits through immutable, cryptographically stored batch records visible to regulators on the shared ledger.

Blockchain also shakes up energy markets. Services like Power Ledger allow energy consumers to trade solar power surpluses directly via peer-to-peer transactions rather than relying solely on regional utilities. This harnesses localised renewables more efficiently while empowering prosumers as active market participants.

Even governments are testing blockchain to enhance citizen services. Countries in Europe like Sweden and Georgia pilot land registry ledgers that build confidence in legal property ownership. Such applications secure documents using distributed storage, removing the reliance on centralised authorities vulnerable to natural disasters or political expropriation risks.

While yet nascent, these examples exhibit blockchain fulfilling its potential as a trust protocol beyond currency. As a secure, accessible record of truth agreed upon across all public members, it can reform antiquated paper-driven processes to share value in innovative ways, diminish corruption vulnerabilities, and leverage decentralised networks for functions traditionally closed off from open participation and oversight.

Chain 2: Blockchain’s Strengths and Weaknesses

Since its introduction, blockchain technology has been a subject of exploration for developers who have come to understand both its capabilities and limitations. While it has been hailed as groundbreaking, it is still in the process of maturing, which leads to questions about how to increase its realism without compromising its potential. To navigate the opportunities presented by blockchain, it is important to examine its strengths and weaknesses in detail.

At the core of blockchain's strength is its decentralisation. Unlike traditional systems, blockchain networks are not governed by a central authority and transactions are not subject to censorship. As long as users adhere to strong cryptographic standards, they can freely transact without the need for intermediaries or surveillance. This unprecedented level of freedom unlocks innovative business models and fosters creativity.

However, the decentralised nature of blockchain comes with its challenges. One of the major limitations is the fact that every copy of the blockchain grows indefinitely, severely limiting its throughput. As blockchain networks become more popular, scalability becomes a pressing concern. The process of managing consensus among a large number of users around the world can significantly slow down the performance of the network.

Another issue that has been raised is the energy consumption associated with [proof-of-work](https://www.investopedia.com/terms/p/proof-work.asp#:~:text=Proof of work is a,for participating in the network.) consensus algorithms. The computational power required for mining blocks and validating transactions has raised environmental concerns. If not addressed, this energy consumption could undermine the sustainability of the decentralised model in the long run.

Furthermore, the absence of built-in governance mechanisms in blockchain networks poses a risk of policy deadlock. Without a clear way to address bugs or unforeseen dangers, the network may struggle to adapt to changing realities. In some cases, ideological differences among participants can impede reasonable adaptations and hinder progress.

While blockchain has revolutionised the way trust operates in digital networks, it currently falls short of delivering web-scale solutions. Its performance lags behind centralized alternatives for many applications, making it less suitable for certain use cases.

It is also important to note that blockchain is not a one-size-fits-all solution for all record-keeping needs. Its suitability depends on the specific requirements of users and the trade-offs they are willing to make. Overall, blockchain has the potential to be transformative, but it needs to address its current constraints while preserving the successes it has achieved at smaller scales. There is still work to be done before the hype of societal transformation can be realised on a massive level.

Chain 3: Blockchain’s Competition

There have always been alternatives to distributed ledgers like centralisation, distributed/ decentralised storage and cloud storage. However, we will mainly focus on alternatives that also use distributed ledgers, as we can more directly compare these solutions to blockchains.

One of the big competitors to blockchain is DAG or Directed Acyclic Graphs. Instead of transactions organised into blocks connected in a sequential chain, a DAG maps them as vertices connected by edges. This allows for multiple unconfirmed transactions to be validated simultaneously in parallel rather than sequentially like a blockchain. Proponents argue it solves scalability bottlenecks created by block refresh intervals under [proof-of-work](https://www.investopedia.com/terms/p/proof-work.asp#:~:text=Proof of work is a,for participating in the network.). Without artificial linearisation delays of blockchain, confirmation times can be exponentially faster according to network activity alone. Solutions like Byteball and Nano can stand up to the prowess of blockchain cryptocurrencies, while others like IOTA’s Tangle allow feeless transactions within IoT (Internet of Things).

Hashgraphs are another alternative to blockchain.  Like DAGs, it has transactions spread organically via an acyclic graph rather than linear block production. However, hashgraph employs a novel asynchronous Byzantine fault tolerant (BFT) consensus algorithm to probabilistically determine transaction order and validity as opposed to DAG which leverages the graph structure itself for distributed consensus. Hashgraphs use a gossip protocol where nodes randomly exchange information with peers, allowing a consensus view to emerge over many such rounds of communication. Hedera Hashgraph is one of the leading implementations of hashgraphs, with its hashgraph networks and its flagship cryptocurrency HBAR.

Lastly, Holochains are a novel agent-centric system as opposed to global ledgers. Rather than broadcast all data publicly, each user/device (“agent”) runs its local chain reconciled peer-to-peer as needed. This avoids wasting resources by only sharing relevant updates. Developers use “DNA” to define how specific applications (“Apps”) work at a base level. Users opt-in by running Apps, agreeing to their validation rules without upfront mining incentives. Apps form their dynamic small-world networks around a shared purpose. Rather than addressing by IP, agents connect socioeconomically through App use.

Conclusion:

At their core, blockchains, hashgraphs, DAGs and Holochains all aim to facilitate secure, decentralised transactions without centralised intermediaries like traditional banking. By distributing transaction validation across independent parties, they build consensus to finalise deals in a verifiable yet non-reversible way.

Blockchain paved the way by serialising transactions in cryptographically linked blocks. However, blockchain scalability hits barriers as work and storage loads grow linearly with use.

Enter faster network structures like hashgraphs and DAGs. By propagating transactions without sequential blocks or energy-intensive mining puzzles, they potentially enable orders of magnitude more throughput.

Yet Holochain uniquely distributes this further by forming autonomous application-specific networks rather than one shared global ledger. It minimises needless replication while retaining security through agent-based reconciliation and DNA-defined governance standards.

In summary, each platform offers a unique consensus and architectural approach optimised for certain usage contexts. Only by understanding their varying properties can practitioners intelligently select the best-fit alternative based on factors like data independence, scalability, decentralisation and systemic incentives required. Though unwritten, we can say that the field’s future looks bright. And that blockchain isn’t going anywhere soon.