Can blockchain power a cashless world?

(MENAFN- Asia Times)

Blockchain has its strengths. These can include improved network transparency and traceability and enhanced security. But its weaknesses? Busy blockchains have often really struggled with both speed and scalability. But is that about to change.

Last year, Massachusetts-based Akamai Technologies and Tokyo-based Mitsubishi UFG Financial Group (MUFG) announced they were teaming up to develop and deploy a blockchain-based payment network for Japan that, they say, will be 'scalable' and boost transaction speeds to more than one million transactions per second. To put this in some context – although this is not an apples for apples comparison – the maximum transaction processing capacity of Bitcoin is less than 10 transactions per second .

Makoto Niimura, Akamai's Senior Director of Technology, told Asia Times that the network will provide a 'fast, reliable and low cost payment infrastructure to credit card, pre-paid card/e-money, and loyalty point providers." The Japanese government says Niimura is aiming to replace "the current payment infrastructure built over 30 years ago and lower the cost associated with each payment.'

The 2020 Tokyo Summer Olympics is expected to attract an estimated 40 million visitors and the country's government is hoping many of them will have a cashless visit to Japan. The non-cash payment ratio in Japan currently sits at about 18%, which is considerably lower than many other industrialized countries but last year, the Japanese Ministry of Economy, Trade and Industry said it wants to increase this to more than 40% by 2025.

'We believe our payment infrastructure will support and enhance this shift,' Niimura said.

Long term, the Akamai-MUFG platform objective is to provide a viable payment infrastructure for the many companies that require small but instant payments. Short term, the platform – that Niimura says can process payments in less than two seconds, from start to finish at the point of payment – should be ready for the Olympics.

'We are currently developing production software along with a complete system for commercial use by April 2020.'

Building a fast and scalable blockchain network is also the primary goal of the Unit-e project being built in Zug, in the heart of Switzerland's 'crypto valley,' by the Swiss non-profit foundation, Distributed Technologies Research and Unit-e's Berlin-based engineering team.

Pramod Viswanath, assistant professor of electrical and computer engineering at the University of Illinois Urbana-Champaign and a researcher on the Unit-e project, told Asia Times that 'by 'scalability,' we include all aspects such as throughput, latency, security, computation, storage and privacy, so everyman devices like a cell phone can participate in the blockchain.'

'Truly scalable blockchains, in this case, means that they operate (via cellphones) at 1,000 to 10,000 times the speed and latency of Bitcoin.' Likely early applications for such a network, adds Viswanath, are e-cash or digital currencies.

Viswanath says the Unit-e blockchain ecosystem, that is based on open-source, decentralized software, should launch in the second half of 2019. He also adds that before we see mainstream adoption, blockchain has still a long way to go and will need the same sort of leaps in innovation that allowed wireless technology to be deployed across society.

To design truly scalable blockchains, adds Viswanath, the sector must start "with a clean slate, borrowing from the fundamental progress in allied areas such as information theory, coding theory, distributed storage/computing, data networking."

Scalability and speed are both issues that have famously troubled the Ethereum Foundation.

The world's third-largest crypto-currency by market capitalization, and with a blockchain platform much used by the crypto sector as a transaction network, Ethereum announced – and then delayed – a Constantinople upgrade, which was touted as a fix for its notorious transaction speed problems.

Lane Rettig, a New York-based contractor and Ethereum developer who has been involved in the Constantinople upgrade, says new features will bring about significant network improvements.

'The most exciting feature in Constantinople is the new CREATE2 opcode, which will allow applications to perform certain actions off-chain [akin to working off-line, so not taking up network bandwidth] that previously had to be run on-chain. This could result in a significant performance boost,' Rettig told Asia Times. 'The 'off-chain' actions enabled by CREATE2 will reduce costs, both in time and money.'

Ultimately, claims Rettig, it will mean applications running on Ethereum will be faster, cheaper to use and more responsive. Which means, in general, more usage will emerge.

'This will take some time as application development is still in a very early phase,' said Rettig.

The future is coming, the future could be cashless and the future – just might – be driven by blockchain.

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