About a week ago, blockchain upstart Polkadot reached a major milestone in its development by launching its first official parachains. And although it's still much too early to judge how well things are going, it's already apparent that Polkadot's on to something. After all, their parachain launch was one of the most hotly anticipated events in the crypto sphere in years. And with good reason.
After all, the ability to scale has long been the Achilles heel of blockchain technology. And the existing solutions to the problem – consisting of layer
2 side-processing schemes and sharding approaches – left much to be desired. Through parachains, however, Polkadot takes the opposite approach to the problem by creating a shared backbone that multiple
blockchains can share.
And that's a concept that leaves lots of blockchain enthusiasts scratching their heads. They wonder – quite astutely – why other blockchains haven't tried this already. And why didn't they? It's because their blockchains are, for all intents and purposes, already parachains. To explain why here's an overview of what parachains are and why Polkadot's scalability approach is both an obvious and brilliant one. And we'll conclude with a discussion of whether any of this is ultimately going to matter or if Polkadot's parachains are hitting the market too late.
Parachains, when you get right down to it, aren't any different from the conventional blockchains that now dominate the crypto market. Or at least they don't have to be. Like Ethereum, Bitcoin, and the other major blockchains, parachains are a layer 1 solution. That means they're self-contained and can support their own complete crypto ecosystems. But they're limited in that they often run into scalability problems because
they rely on massive amounts of raw processing power to validate their
And that's where Polkadot's parachains differ from the rest of the existing layer 1 blockchains. They're highly specialized, meaning that each one is purpose-built to support a specific crypto project or function. That allows them to be smaller, more efficient, and less prone to throughput issues. In the real world, that's a critical difference. It means that when, for example, the next CryptoKitties craze pops up and generates an
unimaginable amount of traffic, it won't bring other projects to a
standstill in its wake.
In other words, imagine if your favorite new DeFi platform could design its own custom blockchain solution that would be most efficient at the kind of processing it needed and didn't have to worry about sharing. That's the promise of parachains. But on their own, parachains can't support a complete blockchain ecosystem. That's because they're not interoperable by design.
To solve that problem, Polkadot mandates that all parachains in its network include base functionality that allows them to talk to a single shared infrastructure. That infrastructure is the real innovation of Polkadot. It consists of a layer 0 solution – a kind of blockchain
networking protocol – that allows for cross-communication between otherwise independent blockchains.
And that communication works both ways. It means that custom parachains that link to legacy blockchains like Ethereum and Bitcoin are trivial to build. In one fell swoop, that creates a system that not only scales well, but can also siphon traffic away from other overloaded blockchains, solving their problems automatically.
The reason all of this has the chance to be so revolutionary is simple: it could end the era of blockchain competition once and for all. Going forward, developers can take a no-compromises approach by building the perfect blockchain solution to their needs. They no longer have to retrofit their projects to fit the functionality of existing blockchain solutions.
And at the same time, new projects won't have to compete against one another for scarce processing resources. That's the kind of thing that could lead to real innovation and could prevent the biggest current roadblock - slow transactions and sky-high gas fees – from suffocating new projects before they can prove their worth.
But first, the whole concept has to gain mainstream acceptance. And although the Polkadot network already appears to be growing by leaps and bounds, there's no guarantee that will continue. Their momentum could stall, or another network could steal their thunder. There's even a chance one already has.
The network I'm referring to, of course, is the Binance Smart Chain. It was itself a proposed solution to the blockchain scalability question – except
it solved the problem by ditching the very decentralization that created the problem in the first place. Theirs is an approach that has divided crypto purists, to be sure, but hasn't seemed to harm adoption, with the network notching a staggering 14.7 million transactions in a single day back in November.
Its success seems to have taken the pressure off of other blockchains (notably Ethereum) and all but eliminated the crippling traffic that makes a solution like Polkadot so appealing. And that begs the question: now that Polkadot's parachains are running, does the industry even need them anymore?
So far, it appears that the answer is yes. There's been a big surge in interest in the new parachains even though there's no longer any immediate reason for developers to rush into using them. And that seems to indicate that there's plenty of appetite for a scaling approach that doesn't sacrifice decentralization in the name of efficiency.
If that holds true, it could be a blessing in disguise for the team at Polkadot. It will allow them to stick to a slow and steady development approach that will make for a better end product. And if solutions like Binance Smart Chain continue to rack up users, it'll always be possible to connect it to Polkadot in the future if there's a need for it.
Ultimately, there's every reason to believe that Polkadot's parachains will achieve their stated purpose. And the fact that the first parachain launches have gone so well seems to reinforce the idea that Polkadot is in this for the long haul. So, all the industry can do is wait and watch to find out if it's now seeing its future in the form of hundreds of individually tailored blockchains running atop a single shared infrastructure. If it is, we may be witnessing one of the quietest revolutions in an industry not known for understatement.