Blockchain alternatives

Blockchain alternatives

They say that imitation is the sincerest form of flattery and, if that’s true then that could explain the number of competitor products arriving on the market to challenge the supremacy of the (currently) anonymous inventors of Blockchain.

Rather like the old VHS versus Betamax comparison, we do not know at this stage which will rise to the top, so in this piece we are going to look at DAG and Gossip Protocols, which are currently the two main groups that Blockchain alternatives can be classified into.

Blockchain requires a Proof of Work from each miner for every single transaction. The most obvious disadvantage of this is that it can act as a serious drag on transaction times, which is proving to be an Achilles Heel for the technology when it comes to widespread adoption.

Right now, there are no available statistics for the maximum transactions per second Bitcoin can currently process, but saying 30 transactions per second would probably be on the generous side and that would be Bitcoin really going full steam ahead. Compare this with traditional payment companies like Visa, however, which can cheerfully handle tens of thousands of transactions per second and are
continually working to make their systems faster and safer.

There is, however another issue with this system: in principle, if any one miner or consortium of miners ever came to control more than 50% of a cryptocurrency network, they could feasibly begin doublespending without a Blockchain-based system being able to identify the fact. DAG is a system that solves both of these issues by removing the requirement for every single node to store the full history of every single transaction.

Instead, DAG, works, essentially on a handshake system whereby Node A’s validation is accepted by Node B and so on down the line. This allows DAG-based systems to work much more quickly without compromising security and hence makes it easier for those behind them to offer lower fees, which is no small point when it comes to establishing new payment systems.

Gossip protocols

Gossip protocols address the issue of speed and security in a somewhat different way.

In IT terms, gossip simply means telling a node something it doesn’t already know, so when Node A gossips with Node B, it fills in the blanks in Node B’s knowledge and so on down the line.

This means that the data payload for each transaction is much lighter than for Blockchain, where the entirety of the transaction history has to be passed from one node to the next all the way from beginning to end. Security is maintained, rather ironically, by a process of “gossip about gossip”, which essentially means adding two hashtags that identify the last two nodes that have exchanged gossip with each other.

This information is used to build a hashgraph, which is continually updated as the gossip passes between one node and the next. The hashgraph also indicates which way any given node will vote, since it keeps track of what information they have (and have not received). Because of this, no actual voting needs to take place, further lightening the data payload.