Blockchains, as we all know them right this moment, have been first constructed and launched for public use in 2008 when Satoshi Nakamoto launched the Bitcoin community to energy their revolutionary thought of a digital forex. Nevertheless, it shortly grew to become evident that this expertise’s potential prolonged far past finance.
The consensus is that over 1000 blockchains are in energetic operation globally right this moment. These networks are tailor-made to resolve issues in virtually each vocation recognized to man—from provide chains to voting methods and even digital artwork; the tech’s purposes are as different as they’re promising.
The speed at which blockchains are being created is pretty secure. Up to now, in 2024, we’ve only one standard new blockchain: Consensys’s Linea. There are positively many builders already ideating and constructing new blockchains for various official causes, however right now, we have to ask ourselves: do we actually want extra blockchains?
Untapped potential in current blockchains
Blockchain tech was absolutely divested from its digital forex software in 2014, and the arrival of what’s sometimes called Blockchain 2.0. This period noticed the emergence of platforms like Ethereum, which prolonged blockchain’s capabilities past easy transactions. It launched in 2015 and was the primary platform to construct on Bitcoin’s foundational success by introducing sensible contracts—automated packages that execute duties with out intermediaries. This innovation unlocked new alternatives, notably in decentralized finance (DeFi) which Bitcoin launched however was restricted and unable to totally energy.
Following Ethereum’s success, different blockchains equivalent to Solana, Polkadot, Avalanche, and Cardano entered the scene, every addressing particular challenges like scalability, velocity, or vitality effectivity. Nevertheless, even these superior platforms stay removed from realizing their full potential.
Ethereum, for example, has grow to be the spine of DeFi and NFTs, but it struggles with scalability. Excessive transaction charges and community congestion proceed to plague the platform, regardless of ongoing upgrades like “The Merge” and plans for sharding.
Equally, newer blockchains designed to resolve Ethereum’s limitations—equivalent to Solana’s high-speed structure or Avalanche’s subnet performance—are additionally dealing with challenges. Adoption charges are inconsistent, and lots of dApps wrestle to realize traction outdoors area of interest markets.
Nevertheless, one may argue that these blockchains are usually not notably underutilized however that the market has not absolutely embraced the necessity for such scalable options. Blockchain adoption continues to be in its early phases throughout many industries, and the demand for such networks could not justify their full-scale use simply but.
Even past finance, blockchain adoption in industries like provide chain administration, healthcare, and digital identification has been gradual. Whereas the expertise’s potential is obvious—enhancing transparency, decreasing fraud, and streamlining processes—its software stays restricted. That is largely as a result of blockchain expertise is forward of its time in lots of respects, with infrastructure growth outpacing market demand and real-world use instances.
In essence, the problem isn’t actually an absence of blockchain platforms however quite an absence of widespread adoption and full utilization of current ones.
The issue of fragmentation
Over 1000 blockchains, of which most of that are primarily based within the monetary sector, additionally undergo one other drawback: interoperability. Most blockchains function in silos, unable to speak seamlessly with each other. This lack of interoperability limits their utility and stifles the event of purposes that would work throughout a number of chains.
Think about a world the place every nation’s web operated independently, with no method to share information or entry international web sites. That’s basically the state of blockchain right this moment. Builders constructing cross-chain purposes should navigate technical complexities, equivalent to differing consensus mechanisms, programming languages, and safety protocols. This will increase prices, slows innovation, and hinders person adoption.
Efforts to resolve this subject are underway. Tasks like Polkadot and Cosmos are main the cost with interoperability options. Polkadot’s Relay Chain permits totally different blockchains to alternate information, whereas Cosmos’s Inter-Blockchain Communication (IBC) protocol facilitates seamless interplay between chains. Chainlink, one other key participant, ensures safe communication between blockchains and exterior information sources, which is especially very important for DeFi purposes. Nevertheless, these options are usually not but universally adopted, and fragmentation stays a barrier to blockchain’s widespread acceptance.
Making a case for fewer blockchains would relaxation on the argument that consolidating networks may enhance effectivity and sooner innovation. Simplifying the blockchain ecosystem would scale back the complexities concerned in creating cross-chain purposes, permitting builders to concentrate on creating extra revolutionary options quite than coping with integration points. Because the blockchain trade matures, the demand for efficient interoperability options will doubtless drive consolidation and the adoption of common requirements.
Scaling current blockchains
That is one other aspect of the dialogue. There are such a lot of options out centered on enhancing the blockchains we have already got and fixing the issues we’ve mentioned above. For instance, Ethereum has made important progress with Layer 2 options like Optimism, Arbitrum, and zk-rollups. These applied sciences course of transactions off-chain, decreasing congestion and decreasing charges whereas sustaining the safety of the Ethereum mainnet.
Different blockchains are additionally innovating. Avalanche launched subnets, permitting builders to create customized blockchain networks inside its ecosystem. These subnets can function independently whereas nonetheless benefiting from Avalanche’s safety and velocity. Solana, recognized for its excessive throughput, continues to refine its proof-of-history consensus mechanism to enhance scalability.
Interoperability-focused initiatives like Polkadot and Cosmos additional improve the utility of current blockchains by enabling them to share assets and information seamlessly. This interconnected method reduces the necessity for brand new blockchains, permitting builders to concentrate on constructing sturdy purposes quite than reinventing the wheel.
Scaling options not solely optimize blockchain efficiency but additionally create a extra cohesive ecosystem. Builders can concentrate on constructing revolutionary purposes quite than grappling with the complexities of integrating a number of blockchains. This unified method may also enhance person experiences, making blockchain expertise extra accessible and sensible.
So, when is a brand new blockchain justified?
Regardless of the benefits of enhancing current blockchains, there are conditions the place creating a brand new blockchain is justified. Innovation usually drives the event of latest networks, notably when present infrastructure fails to fulfill particular wants.
Take the logistics sector for example. Fr8, a blockchain-powered freight firm, has revolutionized provide chain administration by utilizing sensible contracts to extend transparency and accountability. Conventional logistics methods are liable to errors and inefficiencies, however Fr8’s blockchain-based method ensures all events have real-time entry to correct info, decreasing disputes and enhancing effectivity.
Equally, World (previously Worldcoin) is tackling the problem of digital identification. By leveraging blockchain, the venture goals to create a sovereign digital identification system that’s safe, verifiable, and accessible to all. This addresses a important want in right this moment’s digital panorama, the place identification fraud and information breaches are rampant.
READ MORE: Classes in Privateness from the Controversial Worldcoin Mission
In some instances, innovation requires rethinking elementary blockchain rules. Solana and Cardano, for example, launched new consensus mechanisms and architectural designs to deal with Ethereum’s scalability points. These blockchains didn’t merely replicate Ethereum—they reimagined it.
Whereas new blockchains can carry groundbreaking options, they need to serve a transparent goal, addressing unmet wants or advancing the expertise in methods current networks can not.
Hanging a stability between innovation and effectivity
The blockchain ecosystem is at a crossroads the place the pursuit of innovation have to be balanced with the necessity for effectivity. On one hand, experimentation has pushed the trade’s fast evolution, giving rise to transformative improvements like DeFi, NFTs, and Layer 2 scaling options. However, the rising variety of blockchains has created inefficiencies and complexities that hinder widespread adoption.
Consolidation provides a path to effectivity. By decreasing fragmentation and selling interoperability, the blockchain ecosystem may ship extra constant and user-friendly experiences.
On the identical time, continued experimentation stays important for uncovering new prospects. With out it, the trade dangers stagnation, lacking alternatives to redefine sectors like finance, governance, and healthcare. The problem lies in putting a stability: fostering creativity whereas making certain interoperability and collaboration.
One promising method is the event of common protocols and requirements. Simply because the web depends on normal protocols like HTTP and TCP/IP, blockchain may benefit from shared frameworks that allow seamless interplay between networks. These requirements would scale back fragmentation, enhance scalability, and create a extra cohesive ecosystem.
Last ideas
Do we want extra blockchains? The reply lies within the goal they serve. Whereas new blockchains can drive innovation and handle distinctive challenges, the present focus ought to be on scaling current networks and enhancing interoperability.
The blockchain trade should prioritize collaboration, constructing an ecosystem the place applied sciences work collectively to maximise their collective potential. Whether or not by way of consolidation or continued experimentation, the last word objective is obvious: to unlock blockchain’s transformative capabilities and make them accessible to all.
Disclaimer: This text is meant solely for informational functions and shouldn’t be thought-about buying and selling or funding recommendation. Nothing herein ought to be construed as monetary, authorized, or tax recommendation. Buying and selling or investing in cryptocurrencies carries a substantial threat of monetary loss. All the time conduct due diligence.
If you need to learn extra market analyses like this, go to DeFi Planet and comply with us on Twitter, LinkedIn, Fb, Instagram, and CoinMarketCap Group.
Take management of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics instruments.”
