While blockchain continues gaining attention, be it in cryptocurrency sphere or other innovative use cases in business world, new technologies are coming up to address some of their shortcomings.
Bitcoin and BlockchainBitcoin emerged almost a decade ago, and by and large it is still recognized as the first successful implementation of blockchain. Bitcoin is nothing more than a public ledger distributed in a large amount of nodes, and blockchain is the technology enabling this distributed ledger. A more generic term for this type of technology is called Distributed Ledger Technology (DLT).
Since then, we see several new blockchain initiatives. The largest two so far are Ethereum and Hyperledger. They are different in both use cases and deployment model.
Hyperledger is an umbrella of projects hosted by Linux Foundation. It includes several blockchain projects. Different blockchain projects take some different approaches. Here I pick Hyperledger Fabric, contributed mainly by IBM, due to its larger media coverage and business activities.
Hyperledger does not come with native currency. But just this point does not make it less useful. In enterprise or consortium deployment, currency is usually not needed to fund the transaction, as the owner can take care of this. If needed, interfacing with external fiat currency is something doable to fulfil this requirement.
An alternative approach that recently gained attention is the Directed Acyclic Graph (DAG). DAG is considered another way to represent the data structure with advantages over the blockchain approach. Among the projects using the DAG approach are:
- IOTA Tangle: the Permissionless Ledger: With Tangle, there is no node specifically for mining, as each transaction itself acts as the “miner” to approve two other transactions. As no incentive is needed for miners, no transaction fee is needed. One drawback currently on IOTA is the lack of smart contract capability, though some third parties are working on something like token standard on IOTA.
- Swirlds Hashgraph: the Consensus protocol for Permissioned LedgerSwirlds Hashgraph is positioned as a consensus protocol that promises “fast, secure and fair” when handling large volume of transactions.
These new DAG-based technologies are challenging the existing blockchain players, in both permissionless and permissioned implementations. It will be interesting to see whether one of these technologies will prevail over time.