In our previous blog post, we outlined the value of blockchain and smart contracts platforms, highlighting several major platforms that provide smart contract capabilities as well as their real-world applications. With this baseline knowledge, let’s expand on the blockchain tech scene and compare 5 blockchain platforms in terms of their advantages and constraints. At the end of this read, you’ll have an informed idea of which platform suits your business or personal project.
Let’s have a quick refresher on the topic. What is blockchain? In one word – it’s a ledger, but what matters more is its decentralized nature. Blockchains can be enriched with new information, but the previously written data cannot be edited or adjusted. Cryptography is the key that links the contents of the newly added block with each preceding block.
Blockchain networks are driven by a consensus mechanism. In order to reduce the ability to retroactively change or add transactions to the network, all members of the network have to establish a mathematical proof. The computers (also called nodes) connected to this network must agree on the solution. The two main consensus mechanisms are Proof of Work (PoW) and Proof of Stake (PoS). PoW is the most common consensus mechanism, with the primary example being Bitcoin mining. PoS, on the other hand, delivers faster throughput and comes cheaper in terms of computing power and electricity.
As it pertains to existing business opportunities, blockchain has created new services and products in areas such as trade finance, smart contracts, supply chain, security/identification management, and healthcare. There are more than a dozen blockchain platforms with a proven track record of building and adopting blockchain projects. For the purpose of Part 1 of our overview, let’s examine the pros, cons, and use cases for Ethereum, Cardano, Lisk, Hyperledger Fabric, and EOS.
When it comes to block generation, Ethereum is universally considered to be the fastest blockchain in the world. As for the native cryptocurrency Ether, its transaction speed on average takes 6 minutes. Ethereum’s geography is pretty wide, but it is disallowed altogether in China, Kyrgyzstan, Algeria, Bolivia, Ecuador, Bangladesh, Nepal, Morocco, and Cambodia as of July 2018. In addition, you can’t pay with Ether in Indonesia, Thailand, Vietnam, Macedonia, Brazil, India, and Mexico.
Some of Ethereum’s notable use cases include:
Financial services. The Ethereum Network is used to issue microcredits, cashing checks, and procuring investment services. ICONOMI Digital Assets Management Platform allows users to invest in and manage digital assets via diversified baskets of Digital Asset Arrays.
Legal contracts. The blockchain is used to host legal documents like certificates and contracts. Propy partnered with the City Clerk’s Office in South Burlington to record the first U.S. real estate deed using only blockchain technology. The use of Ethereum completely bypassed the need to utilize the city’s recording system.
Cloud storage. The Ethereum Network is a solid choice for developing hosting solutions. Storj is one of Ethereum’s most successful project implementations that provides a secure and decentralized cloud storage to its users.
- Rapid deployment – Ethereum provides the fastest way to launch your ICO;
- Ease of adoption – 80% of existing and operational blockchain projects are based on Ethereum, and it’s arguably the faster way to implement a blockchain;
- Reduced cost – Ethereum eliminates the need to build, maintain, or develop your own unique platform, just ride their blockchain and let the platform manage everything;
- Continuous support – Ethereum’s development team actively implements new technologies that continue to improve the stability, security, functionality of the platform (Casper PoS).
- Lack of autonomy – network-wide changes and updates may not feel like a disadvantage – unless you have an urgent project with a deadline and can’t finish it because a server goes down while it is installing new updates. Constant progress is an advantage that sometimes can turn into a constraint, especially with a decentralized blockchain that does not always warn about minor changes that might still affect you..
- Transaction costs – any time a transaction occurs using your token, the fee goes to enriching the Ethereum network, and not your own.
Hyperledger Fabric is a blockchain platform that comes with a significantly faster consensus mechanism called ‘Kafka Orderer’. In comparison to other blockchain throughput rates, Fabric is by far superior, allowing +1,000 transactions per second. Now put it next to Bitcoin, which has less than 7 transactions per second and you’ll recognize the difference.
As an open source project, Hyperledger was created to advance cross-industry blockchain technologies and collaboration. As such, it does not support Bitcoin or any other cryptocurrency, hence it is pretty much legal in any country where IBM operates.
Hyperledger has many real-world use cases:
Finance. Hyperledger is used to streamline the settlement of transactions, improve liquidity, and provide increased transparency. CLS, a major provider of settlement and risk mitigation services deployed Hyperledger-based blockchain for bilateral payment netting of foreign exchange trades in more than 140 currencies for buy-side and sell-side institutions.
Healthcare. Hyperledger is used to drive cost reduction and improve patient care. IBM Watson Health has signed a research initiative with the US Food and Drug Administration to develop an efficient and scalable exchange of health data using blockchain.
Supply Chain. Hyperledger Fabric can track pharmaceutical distribution and encrypt trading records. The Yijian Blockchain Technology Application System utilizes this feature to reduce the prevalence of counterfeit goods and monitor supply flows.
- Ease of adoption – Hyperledger’s architecture is suitable for businesses who are looking to develop enterprise applications;
- Control – Hyperledger’s hybrid of a public and private blockchain offers confidential transactions by giving parties access via encryption keys;
- Flexibility – unlike most blockchains, Hyperledger does not have a dedicated cryptocurrency and does not require mining;
- Customization – Hyperledger solves performance scalability and privacy concerns by providing a toolbox that allows for significant customization of enterprise solutions.
- Lack of transparency – Hyperledger is not a public blockchain. It remains a viable choice only for B2B or B2C solutions in an enterprise setting;
- Workforce deficiency – Fabric’s v1.0 was released in July 2017, hence the overall low number of skilled programmers able to use it today.
Cardano was created by Input Output Hong Kong (IOHK) and led by Charles Hoskinson, former co-founder of Ethereum and BitShares. Its primary features are smart contract development, decentralized applications, side chains, and metadata. Cardano developers code in Haskell around a Recursive InterNetwork Architecture (RINA).
When it comes to speed, Cardano transactions clock in at 5 minutes, with each transaction carrying a proof of legitimacy. According to a June 2018 tweet, community members on the Cardano Forum represent 55 nations. You can peek the full list here, as well as check out their most recent commercial use case.
Education. GRNET, the national research and education network of Greece, is working on a pilot project to verify academic diplomas. This is the first official use case of this particular blockchain. The GRNET app will be built on a private ledger version called Enterprise Cardano.
- Reduced cost – Cardano’s PoS validation increases transaction speed and significantly reduces computing power required to run the network;
- Availability – Cardano is completely open-source and the team behind it plans to establish a foundation for everyone’s use;
- Additional security – Cardano utilizes a two-layered system by recording transactions and executing smart contracts simultaneously. This way Cardano can address problems with each layer independently.
- Legitimacy – the development community has yet to reach the maturity level of Ethereum and similar blockchains. The Plutus programming language for writing smart contracts is still in development.
LISK started an initiative for developer communities around the world by appointing Country Ambassadors. Primarily, the idea behind the move is to make the ecosystem popular among developers and to provide technical support and assistance.
Back in 2017, LISK’s block generation speed equaled one block every 10 seconds and each block is allowed to have a maximum of 25 transactions (2.5 transactions per second). That said, LISK is capable of scaling to handle more than 100,000 transactions per second.
LISK use cases are somewhat akin to the traditional SaaS model:
Blockchain services. LISK helps developers create specific blockchain services like identity as a service, decentralized hosting, smart contract execution, etc.
Decentralized App Directory. You can search for any dApp within the LISK ecosystem just like you would on an app store.
- Decentralization – LISK’s design is more democratic than comparable systems; DPOS makes use of a delegate voting process to mitigate the potential negative impacts of centralization;
- Flexibility – developers can customize everything to fit their vision and business model, thus startups will see high value in this particular blockchain;
- Performance – the block creation mechanism causes delays in confirming transactions at times, therefore slowing down execution. This inevitably leads to a frustrating user experience;
- Legitimacy – much like other fledgling blockchains, LISK’s primary software development kit is not yet released. The development community and environment remain pretty raw at this point.
EOS is one of the latest additions to the already booming blockchain platform landscape. It operates as a smart contract platform and decentralized operating system intended for the deployment of enterprise-grade applications through a decentralized autonomous corporation model. EOS primarily development language is C++, it can be deployed on multiple operating systems, and it’s creators claim EOS can conduct millions of transactions per second – a much higher transaction speed than Ethereum.
Much like LISK, the value of EOS lies in building decentralized applications. With a January 2018 initial release, there are yet to be any real applications of the technology. The possible solutions based on EOS include, but are not limited to social networks, truly secure messaging apps, sharing economy platforms, etc.
- Hype factor – EOS raised over $3.2 billion in its ongoing (6+ months), year-long ICO. In theory, the research and development of this blockchain can continue on a large scale for decades with that type of funding;.
- Potential – EOS aims to have greater functionality than the Ethereum platform.
- Consensus mechanism – transactions per second rate via the DPOS mechanism is already faster than that of Ethereum, and the velocity is going to get faster as the blockchain continues its evolution.
- Legitimacy – the mainnet only launched in early June, so the technology remains untested by-and-large.
If you’re trying to decide if and how blockchain will work out for your next project, you might be initially deterred by the fact much of blockchain hype is considered hot air. Remember – the same thing was true about Dot Com, Web 2.0 and cloud computing. In the long run, each of those technological eras produced major, industry-altering value.
Like any other technology, blockchain can’t solve every challenge – but it can significantly improve the focal points of your business. DataRoot Labs is here to help you determine whether blockchain is a good fit for you and which blockchain makes the most sense for your project.
Feel free to request a meeting with our team and further discuss a range of solutions of the most popular blockchains as they apply to your specific application!