Discard prices: technology based on blockchain in sustainable development
If you look at the latest headlines, there can be a well-known impression: all these ups and downs of the market so far do not allow to take cryptocurrency seriously.
Despite the efforts of the most eminent developers of the industry, even the largest in terms of capitalization, crypto-currencies remain not just volatile: they are difficult (and dangerous) to use. At least, in that way, what use was assumed by their creators.
And yet in 2018, the hard work of crypto-currency enthusiasts around the world will continue. In particular, optimistic trends may begin to form, if at last, it will be possible to create a system that solves the eternal problems of high transaction fees and slow money transfers – that is, those problems that most users have already become accustomed to.
Transaction channels outside the blockchain
What if the transactions that are currently working on the blockchain do not need this very blockchain at all?
This is the idea behind the development of third-party channels of transactions. The history of the issue dates back to 2015, but this year, perhaps we will finally see an implementation. Although most of the hopes relate to the Lightning Network, the concept itself is actually more abstract.
Third-party payment channels allow two parties using any token to send small transactions in both directions, making notes on the blockchain (with its high commissions and long waiting) only when absolutely necessary. Because of the possible breakthrough effects of this technology, it also focused on the developers of the blockchain Ethereum. Although they rarely contact their counterparts working on bitcoin, the work is still underway on the same decision.
However, at stake is more than mere rivalry. There is the reason to believe that 2018 will differ from all previous years in that in large quantities, at last, transactions of a new type will begin. Developers of the Lightning Network on the basis of successful tests said that the technology is on the verge of readiness. In the meantime, the developers of the Ethereum showed the public successful results of testing their concept of Raiden Network. And on the horizon, perhaps, there is a more ambitious project called Plasma.
Costs in the Real World
As the popularity of the cryptocurrency is growing, more talk about their energy costs. Although this is difficult to prove formally, the algorithm Proof-of-Work (proof of work), the protocol underlying the work of bitcoin is an energy-intensive process. There are fears that excessive electricity consumption can have a detrimental effect on the environment.
Therefore, in this field, since 2011 research is underway. Even the idea to implement the Proof-of-Stake algorithm (proof of possession), or as it is called, “consensus by voting” was even implemented. But all these undertakings did not have the scale of development of the Ethereum.
So, the long-awaited Casper project (and its first working versions), this year will be the subject of extensive discussions. One version of the project, launched in the test network on New Year’s Eve, according to the developers, functioned without errors. Carl Flores, the team’s leading specialist, then declared CoinDesk that “the flight is normal.”
Now the difficulty is to adopt the early version of Casper to different clients supporting the Ethereum. Vitalik Buterin has already stated about his expectations that in the future this technology will be tested in the mode of working together with the algorithm of Proof-of-Work.
Advances in data protection issues
Confidentiality in most of the blockchain was previously neglected, but this may change next year. Most notable is the progress in zero-knowledge proof methods, which Buterin called “the most underestimated development in cryptography to date.” This technology is becoming cheaper and easier to use.
This type of cryptographic algorithm that discloses information without compromising sensitive data has, to some extent, already been adapted to the Ethereum network, which can lead to a wave of projects that are experimenting with smart contracts in a new way.
In addition, earlier this month, technical documentation was published, the White Paper, which describes evidence-based systems with zero knowledge without compromising important data. In many projects, this technology is critical, and its actual implementation can have interesting consequences.
As the relevant technological solutions are maturing, confidential crypto-currencies are developing, for example, Monero and ZCash. In preparation for the upgrade, ZCash strengthens network security, and Monero implements the “Bulletproof” scaling system, which can reduce the commission by 80%.
No, it will not just be a new version of Coinbase or Kraken. The largest exchanges are desperately trying to cope with the influx of new customers, and therefore more and more startups are working on what is named decentralized exchanges. This term denotes not only the new type of exchanges operating in the browse but also a new type of software where users can exchange one kind of token for another without the participation of a third party.
In 2017, we saw many projects of decentralized exchanges, for example, Prism from ShapeShift, 0x, OmiseGo, Kyber Network and others. This year efforts to create these systems will only increase.
The Ledger hardware cash drawer is already integrated with the decentralized exchange Radar Relay, which allows users to exchange tokens without a problem on the basis of the Ethereum. Although the functionality of this solution is limited (for the time being supported only by one purse, and only tokens can be sent on the basis of the Ethereum), many industry experts see in this development the future not only of crypto-exchange exchange but of all technology in general.