Today Standard Kepler Vice President Tobias Mathiasen spoke at Hong Kong Cyberport about the future of blockchain technology. The talk outlined some of the many trade-offs that must be balanced in order for blockchain to flourish in the coming years. Mr. Mathiasen summarised his talk as follows:
The future of blockchain is all about balancing different trade-offs. We often hear that blockchain, and in particular Bitcoin, are “very slow systems”. But we only feel that these systems are slow, because we compare them to Visa and Paypal. Visa and Paypal are in fact very different systems, with very different goals from, for instance, Bitcoin. Visa is a centralised system with the goal of efficiency and speed, while Bitcoin is a decentralised system with the goal of building secure, trustless environments.
There is a careful trade-off between efficiency and decentralisation, and this trade-off caries onto the blockchain, where allowing more transactions per second generally results in faster growing ledgers, leading to increased storage, cpu and bandwidth requirements, which in turn pushes out miners resulting in less decentralisation. Likewise, by building “slower” systems, we can make the barriers to entry for miners lower, resulting in more decentralisation.
Other trade-offs include those between decentralisation and greater security, decentralisation and greater privacy, and decentralisation and greater convenience. I am of the opinion that the need for post-quantum security, privacy beyond that of pseudonyms, and more end-user friendly systems will create a demand for hybrid systems that are part decentralised, and part centralised.
I certainly believe that hybrid solutions will play a central part in scaling blockchain for the future, and projects that involve side-chains (e.g. Lightning), or that take on the form of private chains (centralised decentralisation if you will), hold a lot of potential and should not be cast aside simply because they dare to dial back on the system’s overall level of decentralisation. The end goal is to create value and utility for users, and we shouldn’t worry too much if the path towards that goal ain’t 100% decentralised.