Nick Chong · 1 week ago · 2 min read · Insights via Grayscale Investments
Answering Vitalik Buterin’s 7 Hard Questions For the Blockchain World Part 2: The Scalability Barrier
Ethereum co-founder Vitalik Buterin put forward a series of open questions to the cryptocurrency community in a recent discussion with Mars Finance International WeChat group, postulating seven issues present within the blockchain ecosystem.
Buterin’s “hard questions for any blockchain people” deal with some of the biggest obstacles that stand between the current state of blockchain technology and widespread adoption, highlighting hashpower centralization, the lack of “useful” large-scale apps, the high frequency of hacks, dApp scalability and latency, issues with consensus methods, and the inefficiency of on-chain governance.
In this multi-part series, we will attempt to answer each of Buterin’s 7 questions.
Question 2: Where Are All the Dapps?
“Why aren’t there any useful large-scale applications yet?”
Buterin’s second question appears to be partly directed at the dApp development ecosystem, in which novelty apps and games dominate, and partly due to the lack of transaction throughput that limits the functionality and efficacy of large-scale dApps.
The top five most popular blockchain dApps active in the last 24 hours consist of gambling games or exchanges, neither of which can be considered large-scale applications in the grand scheme of global adoption. Boasting a collective 24-hour user count of just 3,743 individual users and just 12,000 transactions, the dApp scene currently lacks any significant applications.
The lack of active large-scale dApps within the blockchain ecosystem doesn’t mean they don’t exist. There are many highly promising dApp projects holding significant potential for widespread adoption — provided the transaction throughput is present to support them.
uPort is a digital identity platform that aims to create a dApp-based digital passport, facilitating voting via smartphone and a streamlined method of viewing and using smart credentials. uPort is also already active in the real world, with the Swiss city of Zug in the “Crypto Valley” canton currently implementing uPort into a citizen identity program.
Ethlance is another highly promising app that could conceivably drive mainstream adoption, offering freelancers the option to connect directly to potential employers without the need for centralized third parties — such as UpWork — that charge extremely high fees of up to 20%.
dApps Stall until Scalability Problem Solved
Buterin’s key point in his question regarding blockchain applications, however, highlights the primary obstacle that prevents the distribution and use of large-scale apps — transaction throughput. Until scalability solutions such as Ethereum’s Sharding project allow for dramatically higher transaction throughput, dApps are largely limited in what they are able to offer users.
Sidechains, however, may possibly function as an interim workaround that solves the transaction throughput issue without the need for scaling solutions. Projects like Loom Network are currently working on the creation of application-specific sidechains that hold the potential to create dApps of virtually limitless size, rivaling games such as World of Wordcraft or social platforms like Twitter in scope and scale.
While Buterin’s “hard blockchain questions” are intended to catalyzed discussion around the issues holding back cryptocurrency adoption, the Ethereum co-founder himself has provided an answer to the problem of dApps — stating at the Deconomy conference in Seoul, South Korea in April that the network capacity limit is the key barrier holding large-scale applications back:
“If you want to build a decentralized Uber and Lyft on top of an unscalable Ethereum, you are screwed. Full stop.”
You can find all the answers for our “Answering Vitalik Buterin’s 7 Hard Questions For the Blockchain World” series here:
- Part 1: Hashpower Centralization
- Part 2: The Scalability Barrier
- Part 3: Hacks, Security, and Theft
- Part 4: DApp Latency
- Part 5: Proof of Waste
- Part 6: Proof of Centralization
- Part 7: Fundamentally Flawed Governance