Sunday, August 25, 2019

Problem Of Blockchain Technology: Decentralized System Could Be Heading To Centralized System

The blockchain system has become prominent and seen wide adoption because of its decentralised feature. This makes it free from the grip of external influence as well as a centralised system. However, with the long term projection of the technology, it could be heading for a contrast of its status.

Blockchain’s Increase Of Data Detrimental To Its Status

Blockchain technology gives a permanent, immutable record of every transaction that has ever happened on a network. However, its accumulation could bring the decentralised system under the grip of a centralised system.

How? The rate of data growth on the Bitcoin blockchain has grown linearly at the rate of 0.1353 GB per day in the last two years. Bitcoin blockchain has a finite supply, and the mining rewards are halved every four years, and no Bitcoin will be produced again after 2140. By 2140, the projection of the data growth on the blockchain based on the past two years would have reached an estimate of 6 terabytes.

The rate of growth seen in Bitcoin is evident in blockchains such as Ethereum in greater proportion. For example, the data on the Ethereum blockchain has seen a linear growth of 0.2279 GB per day over the past years, and it is estimated to reach the range of 10 terabytes by 2140.

Why Is Data Growth A Problem?

The transparency offered by the decentralised feature is under attack by the linear rate of data growth. Transactions are verified by nodes all over the world, and every witness node on the blockchain network must synchronise all the data on the ledger. However, as the data grows the difficulty of synchronisation also increases. Synchronising the data of 200 GB by a node which requires a stable network and high-speed disk read and write capacity. This is going to transcend to greater difficulty in the future.

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The difficulty is being experienced at the moment already and has shifted the capacity of mining Bitcoin from just anybody to only what can be done by big companies that have extensive computing resources. Also, the use of an average PC for full node synchronisation of Bitcoin would take a month or even weeks for Ethereum.

The increase of data is expected to take place in years and the capacity to full node synchronise data of a blockchain will become what can only be done by giant firms that can invest in expensive computing resources. This act will become what can be done by a few, which will transfer its decentralisation feature to centralised feature.

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