Blockchain technology has potential benefits for swathes of industries, but there is an issue: scalability. Enter the Internet of Blockchains.
Launched last week by Swiss non-profit The Interchain Foundation, it is more officially known as the Cosmos Network, and consists of a decentralised network of interoperable yet independent blockchains that are far more scalable than any single one on its own.
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If Tendermint, the company leading its development, is to be believed, it is the missing link between the blockchain reality of today and the blockchain dreams of tomorrow.
“It’s not feasible to scale the world’s blockchain needs with a single general purpose blockchain,” explain Jae Kwon, co-founder of Tendermint, and Zaki Manian, director of Tendermint Labs, in an email to Verdict.
“Some application-specific solutions exist, such as the Lightning Network for payments, but the easiest and most general way to solve the scalability problem is to have many blockchains running in parallel, all coordinated without any central points of failure.”
The so-called Internet of Blockchains doesn’t just help with scalability, but also tackles some of the other issues that have prevented current mainstream blockchains such as Ethereum from being adopted on a larger and more mainstream scale.
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By GlobalDataThese features have enabled the Cosmos Network to attract some serious partners, despite being extremely new. These include Binance, the world’s largest cryptocurrency exchange by volume; TruStory, a social media platform combatting fake news; Kava, an interledger solutions provider and Loom, a gaming platform. So what is the fuss about?
From one to many: the benefits of developing on the Internet of Blockchains
When it comes to the question of who might use the Cosmos Network, Kwon and Manian say that it is not about the type of applications that can benefit, “but about how applications are developed and maintained, and how they scale”.
In this sense, the technology does not open up more types of applications to blockchain development, as current blockchains, such as leader Ethereum, already provide full support. Instead the benefits lie in the sheer scale and complexity made possible.
“Theoretically, any application can be developed on Ethereum, as Ethereum’s VM is turing-complete,” say Kwon and Manian, referring to how the virtual machine system used by the blockchain leader is capable of simulating any type of computer system.
“But a single Ethereum blockchain doesn’t scale, and the Ethereum ecosystem doesn’t let developers create their blockchain application in existing established programming languages such as Go or Java.”
The Internet of Blockchains also provides developers with a greater level of control over ongoing maintenance of the application.
“A smart contract deployed to the Ethereum mainnet is ultimately maintained by the Ethereum community and miners, but blockchain developers may wish to create their own sovereign security group that maintains that blockchain application, especially in the case of unforeseen software bugs,” they say.
Proof of Work vs Proof of Stake
Beyond enabling multiple blockchains to be used together, the Cosmos Network, which is built on Tendermint Core consensus engine, also improves scalability by using a proof of stake (PoS) mining mechanism rather than the more widespread proof of work (PoW) method.
These are two rival solutions to enabling all computers within a blockchain network to agree on the creation of a new block. And while PoW is far more widespread in current systems, PoS is more efficient and scalable.
“Proof of Work mechanisms have a number of scalability, security and efficiency limitations that Tendermint, as a BFT PoS-based system, is able to overcome,” explain Kwon and Manian, referring to Byzantine Fault Tolerant, the type of algorithm the system’s proof of stake mining mechanism uses to achieve consensus.
“For one, BFT-PoS mechanisms are much more energy efficient. While in PoW-based blockchains, validators compete for block rewards by operating computer servers and expending large amounts of electricity, in a PoS system, validators are selected by the network based on staked tokens and cryptographic signatures. This eliminates the need for energy-intensive mining operations and is a more sophisticated and environmentally-friendly means of achieving consensus.
“This efficiency also makes blockchains more scalable, as you can secure significantly more blockchains using the same unit of energy as in proof-of-work; PoS is also more secure than PoW in the sense that in PoW, a miner in one chain can divert its energy to attack another PoW chain with relatively little skin in the game (since miners are so anonymous), whereas in PoS there is more accountability and skin in the game due to the usage of cryptographic pseudonymous identities.“
This makes this system more suitable for enterprise environments and applications that take the technology away from its cryptocurrency roots.
“PoS makes securing many independent blockchains feasible, whereas PoW is theoretically only secure for the top PoW chain (namely Bitcoin), and insecure for the long tail.”
Notably, this platform also allows transactions to be fully completed in seconds, whereas PoW systems such as Bitcoin can take an hour for each to become final.
“This means that mobile wallets can receive instant transaction confirmation, making trustless and practical payments a reality on smartphones,” they say.
“This also has significant ramifications for Internet of Things applications.”
From security to usability: solving current-generation problems
While the ability the scale up blockchain beyond current capabilities is a core benefit of the Cosmos Network, other features also help to make it a more suitable option for commercially minded projects built on the technology.
“Some blockchain use cases require sovereign security; for example, a country or enterprise consortium will probably prefer to secure its own blockchain by running Tendermint validators, rather than relying on the judgement of Bitcoin or Ethereum miners in case of any software bugs or attacks need to be resolved,” say Kwon and Manian.
There is also an ease-of-use factor. At present organisations wanting to utilise multiple blockchains have to acquire tokens or cryptocurrencies for each, complicating their overall management, but the Internet of Blockchains eliminates this issue.
“The best way to solve the scalability problem is by having many blockchains, but without an interoperation protocol for tokens between blockchains, each new blockchain begets the need for yet another payment/currency/fee tokens to manage, which poses a usability nightmare for the end user,” they say.
“The Internet of Blockchains design of the Cosmos Network allows users to use the same token across many blockchains.”
Perhaps most significant is the change in pace of development.
“The launch of the Cosmos Network takes the blockchain development cycle from idea to implementation down from years to months,” they explain.
“Developers who are eager to build their own blockchains can do so quickly using the Cosmos SDK, and scale their applications to hundreds of thousands of users. In turn, this will have a positive knock-on effect on mainstream adoption of blockchain technology.”
Read more: The myth of banking on blockchain: Banks will only profit from the decentralised ledger
