Opinion: Mass Adoption of Blockchain Technology Will Require Five Essential Tech Innovations
By Sean Barger, founder of CPUcoin
However deep and long the current crypto winter may be, mainstream use of blockchain is not prevented as much by temporary market downturns as it is a structural question. Until now, we have had to make do with too many compromises in technical performance and security. These considerations are equally important for the average user as for professional traders and institutions.
It’s no wonder that blockchain adoption is lagging with the barriers there are in place. Five main, inter-related challenges exist that must be settled before we can expect the era of what I would call the “real Web3” to kick in. These include solving: scaling; high gas fees for transactions; security risks; interoperability and ease of use, all while retaining the decentralized and promise of Web3.
Scalability and the Blockchain Trilema
The proverbial blockchain trilema is well known – it postulates that there is a trade-off between decentralization, transaction scalability, and security. Blockchain’s claim to fame is that it works “trustlessly”, without an intermediary and based on decentralization. To do this, it requires network consensus in order to confirm transactions. Bitcoin represents the original, decentralized blockchain technology, using a Proof of Work consensus mechanism to confirm transactions based on mining – participating nodes race to calculate a hash algorithm. This makes it difficult to spam the system with the mass of transactions that would be required for a 51% majority attack in the consensus process. However, at 7 trx/sec and 60 minutes for block finality using 6 confirmations, PoW is very slow and uses huge amounts of gas for compute power.
Of course, there are other consensus mechanisms that are faster. Proof of Stake represents a degree of security trade off since no complex algorithms are solved. Instead, nodes that have a vested interest (stake) in the token of the ecosystem for which they provide transaction confirmation services are randomly chosen. However, even after Ethereum’s move to the PoS consensus mechanism, it currently only achieves a maximum of 30 trx./sec., with a block finality of ca.15 minutes. This is still not a workable level of scalability.
The problem is that ca. 60% of DeFi applications work through the Ethereum Virtual Machine. FinTech, crypto exchanges, and enterprise applications require a transaction speed and scalability which far surpass the technology currently available on Ethereum. To replace traditional finance, blockchain based fintech must achieve throughput that trumps the average 20,000 trx./sec. that are processed on NASDAQ.
Security and Interoperability
The “Blockchain Trilema” is not the only factor that has security implications. As a result of developers’ efforts to fix technical shortcomings, a total of over 1000 blockchains exist today.
Even if we consider that a mere handful of these make up the bulk of use, it is practically impossible to use crypto and blockchain tech today without working on several protocols simultaneously. This represents both a security risk and a considerable hurdle to adoption, especially for non-technically inclined users.
The current solution to transferring crypto cross-chain are interoperable bridges. However, these have repeatedly enabled the loss of millions in digital funds. In 2022, 69% of crypto funds lost were due to bridge attacks, which amounted to a total of 13 such attacks, totalling $2B. This vulnerability is due largely to centralization. When transferring crypto from one blockchain protocol to another, most bridges use a central storage point of funds, which puts them at risk for hacks. Consequently, new technology is needed to empower blockchain interoperability that eliminates bridges entirely.
Ease of Use
Let’s face it – there is no way that there will be mass adoption of crypto and blockchain technology as long as you practically need to be a programmer to confidently work with them. However, that is the way much of it is currently designed. Non-technically inclined users are faced with relatively daunting conditions in the space. You typically need to work on several protocols simultaneously, each of which requires a separate sign-in. For many applications you need to use separate wallets and complete several steps to achieve an end-to-end result and conclude a transaction. User friendly wallets are key for mass adoption. The market leading EVM compatible wallet comes with the risk of numerous vulnerabilities and does not guarantee transaction success – it is unreliable, can time out and cause users to lose their funds when transferring them. They either risk losing large sums or face dividing transfers up into smaller increments, which accrues separate gas fees each time. Other risks include revealing unencrypted seed phrases, fake wallet extension downloads, links to fraudulent websites that gather user data and trojan attacks.
A Note on Decentralization
While decentralization is the basis of trustless blockchain technology, centralization is still much more prevalent than we usually assume, and that has to change if the promise of Web3 is to hold true. For instance, one fourth of Ethereum’s workloads are powered by Amazon’s Web Services (AWS) cloud. Almost eighty percent of the world’s personal computers have Intel processors inside them. At the same time, Intel’s Management Engine (ME) has been incorporated into Intel’s processors since 2008, and it purportedly opens a back door. An alternative to this risk could be a blockchain that works on open source and purely decentralized computing power.
Airdrops?: Gas Fees That Can Cost More Than a Project’s Start Up Funding Reserves
Ever since Auroracoin handed out its native cryptocurrency in 2014, the development of blockchain projects and digital currencies has been unthinkable without airdrops. This instrument which distributes tokens for free in order to draw attention and user engagement to projects and grow applications’ use is widely utilized. However, is it really free? The answer is no, and for start-up EVM projects, this is effectively a barrier to equal opportunity and development, meaning that only the most financially powerful projects can use the instrument. The reason is simple: A transaction on Ethereum costs between $1-$3 in gas fees. So if my project CPUcoin were to transfer 3,000,000 tokens to 200,000 wallets, this would cost between $200,000 – $600,000. Obviously, such exorbitant fees are neither viable nor in the interests of the original idea of Web3 which proposes to enable decentralized project development and equal access for everyone.
What is Needed
When I analyzed the cost-benefits of the aforementioned airdrop that I planned for CPUcoin, it made little sense to airdrop directly on the Ethereum chain. However, after some searching, I luckily discovered a solution that solves these key five challenges to mass adoption of blockchain technology that I have outlined here, including the gas fee dilemma. Wire Network offers ease of use via a single sign on (SSO) that utilizes one intuitive user interface. It provides secure, decentralized, reliable transactions between blockchains without bridge technology or oracles. Instead, it uses UPAP (Universal Polymorphic Address Protocol) and a universal wallet address that is cross-chain interoperable. Wire Network is a Layer 1 solution that settles transactions from multiple blockchains, thereby making gas fees completely superfluous. Since transactions across the network incur no traditional gas fees, it saved us at least a half a million dollars for delivering the airdrop. The Wire Network runs on an open-source hardware security model (HSM) which is truly decentralized and bypasses the centralized proprietary firmware typically used by most blockchains such as anything that contains Intel’s Management Engine (IME). Instead their nodes boot from a trusted open-source state which can be audited just like the code. It also utilizes CPUcoin’s cloud instead of AWS or other centralized services. It thus ensures decentralization and auditability right down to the hardware. Finally, Wire’s layer 1 solution is designed to scale to hundreds of millions of TPS, and in its current development stage has achieved over 100,000 TPS, easily surpassing the requirements of NASDAQ and enabling the technical requirements for a digital successor to traditional finance. This is achieved through a micro transaction system that is extremely scalable. In the end, it has everything necessary to enable the seamless migration of the Web2 world to Web3, while at the same time providing the resilience necessary to enable innovative new business models in this next generation of internet evolution.
About the author
Sean Barger is a multi-exit entrepreneur and decentralization pioneer. He is the founder of CPUcoin, a cutting-edge decentralized infrastructure platform that leverages idle computer resources to power cloud-based applications, including generative AI, dynamic imaging, on-demand video transcoding, live streaming, high definition responsive content display, and general computing scalability. CPUcoin incentivizes anyone to install the CPU and GPU PoPW miner on any Windows or Linux machine (MAC OS coming soon). The platform empowers users to monetize their unused computing power and earn rewards in the form of CPUcoin tokens. CPUcoin is traded on CEX: Probit.com – MEXC.com DEX: UniSwap V2
Barger has also left a lasting impact on the gaming industry, notably in his work on Tetris. As the original producer of Tetris in the United States at Spectrum Holobyte where he started his first job in California 1987. Hee developed versions of the game for multiple platforms, including PC DOS, Apple ][+, Apple ][ gs, Macintosh, Macintosh Color, Commodore 64, Atari ST and Amiga. His contributions to Tetris helped popularize the game in the US and secure its place in gaming history, well before the Nintendo Gameboy release. Sean has eight issued patent credits to date, positioning him as one of the inventors of core Web2 dynamic content technology. Today, he is pioneering Web3 dServices with CPUcoin.io and SaaS dApps with Equilibrium.com.