Although cryptocurrencies are the ‘it’ topic of the moment, the technology that makes them possible—blockchain—is having an equally successful run. Blockchain uses a decentralized network of nodes to handle processing and verify transactions, creating blocks of data that form a public, unalterable ledger of every transaction that was logged on the network. Additionally, the technology has proven itself an effective tool to build applications, offering significant advantages over existing infrastructure.
Blockchain’s decentralized nature delivers applications built on it a better degree of security. Moreover, blockchain’s public ledger and smart contract functionalities have excellent applications in several industries such as logistics, security, web optimization, and business-to-business transactions.
Even so, a blockchain is only as stable and secure as its creators envisioned. Even with its strong security benefits, the technology has shown vulnerabilities in the past. Ethereum, the platform most known for blockchain-based development architecture, reflects the highs of blockchain, as well as some of the potential lows. It remains the gold standard for blockchain-based development, but some security inefficiencies could push it into serious competition. With new projects looking to provide more secure, focused networks for development, Ethereum may soon be in a fight for its throne.
Early Entrants Set the Bar
A close successor to bitcoin, Ethereum was created as both a cryptocurrency and a platform for companies to build applications and services on blockchain. The coin introduced smart contracts, agreements coded into algorithms that offer an automatic and transparent way to transact. Parties can program terms into a smart contract that will only execute if specific conditions are met.
However, smart contracts and many of the other benefits, while useful, rely heavily on the platform that supports them to work. If the platform isn’t performing optimally, this is reflected by an application’s service. While it’s not a common occurrence, Ethereum has seen incidents that have slowed its network considerably, and even suffered a few security breaches. Recently, an online game named Crypto Kitties slowed the Ethereum network after commandeering nearly 13% of the all the networks power briefly, even raising the costs of transacting on the chain itself.
More concerning is news of breaches on Ethereum’s chain, which fly against its promise of a secure network. Etherparty, a blockchain-based application, lost several investors’ coins when hackers replaced the wallet number on the ICO smart contract with their own before launch. Even worse, a misguided developer recently broke into a multi sig wallet and accidentally neutered a smart contract that “locked” anywhere from $150 million to $350 million in Ethereum to the blockchain irretrievably. These are far from the only examples, and though not exclusively Ethereum’s fault (user error is a common thread), they highlight a frightening pattern. More and more, cracks are showing on the Ethereum blockchain, and the developers haven’t done enough to stem the tide.
Even so, blockchain isn’t a static technology. It has continued to evolve from its inception and has even produced some solutions that may overtake Ethereum as popular application platforms. With a more secure value proposition, these services could give the reigning platform a run for its money. These new blockchains offer a more focused approach to building applications, and a strong emphasis on security makes them an increasingly appealing choice.
Ethereum is Slow to Pivot
Despite recent missteps, Ethereum remains the most popular destination for new companies to build on blockchain thanks to its innovative smart contracts and token issuance. Their ability to help people or companies remotely, autonomously, and verifiably exchange value for services is a major advantage. Even still, these security incidents are not the only ones, and similar problems could give other smart contract platforms the opportunity to steal some of Ethereum’s market share.
Moreover, Ethereum has been slow to adapt to changing needs, relying on its original model with minor alterations. While this is still enough, it’s become evident that scalability could quickly become a problem that opens the door for more threats. A rash of ICO-related breaches show increasing boldness by hackers. Instead, companies are taking a narrower approach, hoping a more streamlined solution offers businesses a more secure and friendlier ecosystem.
One such challenger, Jelurida, has created two platforms it hopes will challenge Ethereum’s dominance. While NXT was accused of having too much in the way of deliverables, spreading its focus too thin, the company expects its most recent entrant into the platform game—Ardor will prove to be a silver bullet. Ardor is custom-designed to let developers easily build applications on the blockchain with minor input.
It also features some creative improvements on Ethereum’s blockchain, including its parent-child chain architecture, which reduces bloat on the main chain and allows for better maintenance of the overall network. Ardor also utilizes Proof-of-Stake, which reduces the strain on each node and eliminates the need for costly mining, as coins are minted.
Ardor's use of child chains that stem off from the main chain also adds several layers of security. The main blockchain will prioritize the overall network's security, remaining lightweight and adaptable to changing loads. Additionally, each child chain will have transactions and data that don't affect the larger chain, so even localized breaches can easily be quarantined without causing larger issues.
Finally, NXT and Ardor both offer an improvement on Ethereum’s smart contracts. While ETH contracts are still the norm, there have been several instances where a poorly designed contract wipes out large chunks of the currency. Jelurida’s platforms use smart transactions that are not programmable, enhancing its overall security while providing less room for the error’s that commonly plague Ethereum.
Cryptocurrencies may be getting the attention, but blockchain has more potential in the long run. Jelurida and its peers have the right idea, creating blockchain solutions tailored specifically for individuals or companies to build on them swiftly and creatively. Much like Ripple created a niche market to focus on the needs of streamlining cross-border transactions, Ardor, NXT, and others can capitalize on the demand for an agile and secure blockchain platform to build applications.
This creation of secure ‘Blockchain-as-a-Service’ applications could have a significant impact on the industry, leading to even greater adoption and a faster rate of development. For businesses who are hesitant to make the leap, simplified platforms offer a great way to test the waters and eventually migrate to blockchain. Currently, Ethereum is the most popular solution, but its high barriers to entry, and more importantly its increasing vulnerabilities make it a difficult sell.
Blockchain is a somewhat paradoxical concept—it exists because of a firm belief in disrupting the status quo, but its original shepherds remain entrenched in their ways, limiting the real impact the technology could distribute. This is due as much to user preference as the steep investment in Ethereum and its peers. However, the new wave of blockchain innovators will eventually force the originals, and their stakeholders, to evolve and adopt, or die. No matter who wins, we all do.