Internet of Blockchain
The world was turned upside down when Satoshi Nakamoto published the Bitcoin whitepaper back on October 31, 2008. Among many things, Bitcoin introduced the world to the blockchain technology. Ever since then, the floodgates have opened, the blockchain technology has been adopted by some of the biggest companies in the world. Ethereum showed the world the versatility of the blockchain technology.
However, with fast adoption comes problems. The problems come in the fields of scalability and interoperability. Cosmos Blockchain, is looking to solve all these and bring blockchains to the next level Before we acquaint ourselves with Cosmos, let’s take a closer look at the Scalability and Interoperability problem.
For bitcoin and ethereum to compete with more mainstream systems like Visa and PayPal, they need to seriously step up their game when it comes to transaction times. While PayPal manages 193 transactions per second and visa manages 1667 transactions per second, Ethereum does only 20 transactions per second while bitcoin manages a whopping 7 transactions per second! The only way that these numbers can be improved is if they work on their scalability.
Now there have been many possible solutions to the scalability problem like:
However, while both can be useful, they have their own disadvantages.
Segwit is a vertical scaling solution, meaning that it is extremely dependent on the physical capabilities of one single machine. Lightning Network, on the other hand, is a brilliant payment system, however, it can only handle microtransactions as of right now.
Let’s look at the current ecosystem. In the cryptosphere, we have different crypto coins such as Bitcoin, Ethereum, Litecoin etc. Similarly, in the legacy financial world, we have systems like the traditional Banks which use SWIFT, ACH etc.
The problem lies in the fact that it is extremely difficult for these individual entities to communicate with one another. It is tough for bitcoin to know what is going on in Ethereum and vice-versa. More often than not, these blockchains become silos and rarely share any information with each other. We do have solutions like atomic cross-chain swap however, that is not true interoperability.
It becomes doubly difficult when banks try to communicate with the cryptos.
This is why, the crypto exchanges, which provide a portal between cryptos and banks become so powerful and important. However, there in itself lies a problem. Exchanges are not a decentralized entity and are extremely vulnerable.
•They can get hacked.
•They can blackout for long periods for system upgradation.
Plus, there is another area where this miscommunication between the legacy world and the crypto world can lead to a disastrous result: ICOs.
In ICOs, an entity gets millions of dollars in exchange for their tokens, however, saving that money in their bank accounts can become difficult. The banks would obviously want to know where all that money came from and who were the ones who provided that money which is something that is near impossible to provide.