Enterprise systems, by their very definition, must be able to scale to accommodate enormous markets, and large volumes of transactions. Enterprise assumes large numbers of customers, and a large number of transactions. Competition often lies in an organization being able to conclude a transaction faster, at a lower cost. Speed is at the heart of competitive advantage.
In the world of blockchain the reference is often Bitcoin, since it is the progenitor of the industry. Bitcoin is a relatively successful proof of concept to show how a person to person (P2P) payment network can exist without the presence of trusted third parties. Since then the world has woken up to the fact that this can be useful in more ways than moving money from one entity to another.
So why do we contend that Bitcoin is a proof of concept, and not the glowing commercial success many of its proponents believe it to be? There are various arguments.
- It has attracted only a bit over $6 Billion, not all of it transactive but rather speculative holding. This is a fraction of any reasonably successful P2P payments network moving fiat currency.
- It has not been adopted as a solution by the banking industry or major commercial entities.
The overriding argument is, however, that it cannot scale to meet demand. There are some eloquent rebuttals such as Andreas Antonopoulis’s talk on Bitcoin scaling. The fact remains that, without significant changes, Bitcoin doesn’t even come close to the scalability required for large, enterprise markets. A transaction may be fast, but the settlement time is too long, the blocksize inhibiting, and the ultimate measurement – throughput – is a meager seven transactions per second. Bitcoin is a successful proof of concept.
Other blockchain designs have improved on this, such as the Lightning and Thunder initiatives. The real test of speed and throughput comes as the trend of hooking billions of devices into the Internet accelerates. The Internet of Things (IoT) is presenting challenges in a number of areas, including privacy. Speed and throughput simply have to be blindingly, staggeringly fast. Someone is going to want to analyze all the data being generated by all these devices. Many of the devices will be transacting value with each other. The management overheads of so many interconnected devices, alongside the growing human population, will result in non-financial transactions.
At ChainReactor we contend that a system that can handle a few thousand, or even a few hundred thousand transactions per second is going to be woefully inadequate to the task. Global capability of billions of transactions per second will be required alongside the features that make blockchain attractive.