The Future of Blockchain Technology

This article discusses the main issues of blockchain technology to prepare itself for the upcoming future.

Since the crash of the crypto bubble last year the hype around the blockchain seemed to decrease drastically. What will the future of decentralized ledgers look like? Will their influence on our lives just vanish with time?

When Bitcoin and Blockchain technology occurred nearly ten years ago, a new era began. The idea of organizing data in a decentralized manner means nothing less than giving power back to the people. Since then, many blockchain networks have been created, all with different properties. Although the technology itself is great, it faces some issues, that will determine its future. In this article I would like to discuss those issues and how the future of blockchain might look like, seeking a way to combine the three future key technologies — Distributed Ledgers, Artificial Intelligence and Quantum Computers.

Energy efficiency

As many of you already heard for sure, in a decentralized network it is mandatory to somehow achieve consensus between the participants (often also called nodes). Therefore many algorithms have been developed, to achieve that very goal. The most used one is the Proof of Work. Miners have the task to solve a cryptographic puzzle in order to be able to create a block and append it to the blockchain. But to be honest, solving that puzzle aims at no real goal, except for forcing miners to kind of waste their computing power. Wasting computing power means wasting energy, which does not seem too smart in a time like we live in now, where energy is a scarce resource. So other solutions had to pop up — and they did. For example the Proof of Stake algorithm. But the problem with this one is, that it gives power to the rich and makes them even richer. What other possibilities might exist, to reach consensus in a decentralized network without wasting energy or making the rich wealthier than they already are?Nowadays, artificial intelligence is used in many areas, where a lot of computations need to be done. So one way is, to use a sort of Proof of Work algorithm, in which miners do not waste their computing power, but provide their power to an artificial intelligence solving important tasks. There is a consensus model based on that idea, and it is called the Proof of Cognitive Work. Using this, might lead to a combination of two of the three future key technologies — blockchain and AI.

Scalability

Another issue that appears when dealing with Blockchain is the problem of scalability. The Blockchain, in a simplified manner, is a list of blocks. Each block contains data, data require storage. But the storage each block has, is finite, so only a finite amount of data can be stored in one single block. In a cryptocurrency, those data are transactions. For transactions to be confirmed, they have to be part of a block. With increasing size of network participants, the number of transactions grows. Thus, the time it takes for a transaction to be fully confirmed increases as well. This is nothing that any creator of a blockchain would desire. How solve that problem?

There are solutions for that! One of those has been proposed by the IOTA foundation, introducing the Tangle instead of a blockchain. In the Tangle system, each transaction stands for its own, and in order to be confirmed, it has to first confirm at least two other transactions. This leads to the fact, that transactions get confirmed quicker, the more participants there are in the network. For a more detailed introduction to IOTA’s tangle, take a look at one of my previous articles “How IOTA solves Blockchain’s scalability problem”.

Another possible solution to the scalability problem is the so called block lattice structure, that is used by the cryptocurrency NANO. It can be seen as a hybrid between a blockchain and a directed acyclic graph (which is the underlying structure of the Tangle). I will dedicate an article to NANO’s way of solving the scalability issue soon.

Quantum Computers

Let’s begin to consider a future even further away than just a few years. A future, in which technology has reached a standard so advanced, that quantum computers no longer only exist in our minds. The most obvious difference between a quantum computer and a classical one is the fact, that they are able to complete computational tasks faster than computers nowadays. A lot faster. They do so by using the laws of quantum mechanics. In this model of the subatomic world, particles don’t behave in a deterministic way anymore. A subatomic particle can, for example, be in many different states at one time — which is an extremely simplified description. Using this fact, computational operations can be done a lot faster. Now what is the issue concerning blockchain technology?

The blockchain is a cryptographically ensured database. The used cryptography is based on the math of elliptic curves, to be more specific, on the discrete logarithm problem. This problem states, that it is infeasible for classical computers to calculate the private key of a user only knowing his or her public key. But when it comes to using quantum computers, the world looks a lot more different.The so called Shor algorithm has been designed, to factor large integers into a product of primes. This is the foundation of the RSA encryption method. The Shor algorithm has also been slightly changed, to be applicable to the discrete logarithm problem. To really use that algorithm, one needs to have a quantum computer of a kind, that has not been developed yet. But the time will come. So how can we adapt to that change?

This is the problem, that Post-Quantum cryptography researchers deal with. They work on cryptographic methods, that may be secure, even when being attacked with the immense power of a quantum computer. One of those methods includes using so called Winternitz signatures (which I may also dedicate an article to). You may not believe it, but there already exists a cryptocurrency using that kind of Post-Quantum cryptography system — IOTA.

So all in all, the future of blockchain is not dark, it seems brighter than ever. Many Blockchain or Distributed Ledger networks are preparing themselves for the upcoming challenges. And who knows — maybe combining the three future key technologies might result in a kind of superior technology.

Thanks for reading! Feel free to leave some comments, since I am always eager to improve my work! :)