Challenges

Designing an alternative to the blockchain in particular the ones hailed by Bitcoin, Ethereum, Lightning Network, et al, is an audacious task I know!

Current inefficiencies

This is 2018 and to my knowledge most blockchain based technologies focus on some sort of cryptocurrency either as the product itself or being the financial underpinning of whatever product the technology proposes.

Key reasons to designing an alternative to the blockchain are

• privacy
• transaction costs
• speed
• security

Privacy

A prominent characteristic of the implementations of blockchain is the transparency which adds credability and trust to the claims inherently amassed in the chain.

2 issues: on one side privacy is essential to all commerce. Publishing every detail to a business transaction will remove a lot of leverage to both the supplyer and the buyer and usually not be in any of their interest! One the other side privacy requires transactions to be legit. Barring public services (be it police, tax, drug enforcement, etc) the ability to follow the money will greatly diminish their capabilities to upkeeping law and order.

The design, thus, will require individual transactions to be private but be open to justified scrutiny.

Transaction costs

The single most challenging issue with the Bitcoin at present (January 2018) is from my point of view the transaction costs. They are comprised of

• huge environmental costs from mining
• fees effectively barring most transactions worth less than 150-200 US$
• volatility costs due to unpredictable fluctuations in fiat exchange rates

The design should encourage transactions and remove speculation. Fees should either not exist or be next to negible (in the order of 1/1000 of a cent on the dollar).

Speed

Webshops handle a growing percentage of all trade and it is forseeable that in 5-10 years time most if not all trade will be connected to the web. Current processing in minutes if not hours is the wrong answer to an expansion of a blockchain based exchange!

The design should allow transactions to occur in milliseconds.

Only very few transactions are made in a split second! Stock trades might seem like they get trades sub-second but in reality traders have plenty of time to setup their intent. Consumers in Walmart likewise. The minute you walk into a shop, your ledger and the shop ledger could be working together to establish whether it will be at all possible for you to leave the shop with anything in the first place!

Security

Most cryptocurrencies have experienced onslaughts and attacks with an intent to robbering the dealer(s). The users of a cryptocurrency considers this a likely risk with a high degree of taking place. The consequences are less volume, less trade, less trust in the currency!

The design should incorporate security measures bestowing trust in the design, the transaction, and the currency.