Vitalik Buterin, the cofounder of Ethereum, holds some serious clout in the blockchain space. So when he tweeted last week about a new project that he’s looking forward to going live, peoples' heads started to turn. You know when Buterin endorses a project, it must be good.
Blockchain projects are often pretty ephemeral and don’t last past the hype, but the thing that has Buterin and many others excited about is the idea behind the project, Liquidity.Network. It brings potential for blockchain and cryptocurrency to scale and be widely accepted and woven into our daily lives.
Undoubtedly, a scalable version of blockchains like Ethereum would make Buterin’s dream one step closer to fruition. Not only are the current systems complex, they often don’t work well together, and no efficient solution has been created … until now.
The Ethereum cofounder’s tweet has led to a slew of interest in the project, which is making rapid ground on their mission to become the "trustless version of Paypal." The founders of Liquidity.Network, Arthur Gervais, a blockchain professor at Imperial College, London and Rami Khalil, are working to solve the major scalability issues faced by many blockchains, starting with Ethereum that have thus far been unanswered.
The Current Issues With Blockchain Scalability
Blockchain has astounding potential to revolutionize the way we live and operate on a daily basis. But even with all of that potential, the technology is being held back by some barriers that need to be resolved.
Current blockchains, such as Bitcoin and Ethereum, can only process ten’s of transactions per second. Other mainstream payment process systems, such as Visa or Mastercard, on the other hand, are able to process thousands of transactions per second. Time, as we all know, is money. And the slow process time is stalling blockchain’s progress.
Secondly, a big problem that is currently faced in the blockchain space is the high transaction fees that are attached even to very small payments. High transaction fees make micropayments in cryptocurrency unworkable and can also make promotional activities like ‘airdrops’ an expensive exercise.
Finally, most payment channel networks currently require user’s collateral to be locked up for every channel, which basically means that funds cannot be used until payments are routed. For many users, locked collateral is not an option therefore excluding many people from using the technology.
The Solution to Blockchain Scalability
Liquidity.Network’s off-chain payment platform enables users to transact Ethereum instantly and with no gas fees. An off-chain transaction is one that is not carried out over the blockchain but through an out-of-band internet connection. This allows Liquidity Network to avoid adding to the congestion already seen on popular blockchains, whilst still having the transactions secured by the Blockchain.
Their proposed solution consists of a series of interconnected payment hubs, addressing the current issues facing 2 party payment channel providers like Lightning and Raiden Network. By utilizing payment hubs, the network is able to accommodate millions of users and allow those users to all interact with one another with their allocated funds while significantly reducing transaction costs, allowing micro payments and increasing the transparency of using cryptocurrency in the market without locking up user’s collateral.
The Liquidity network has designed simplicity into their solution by avoiding complex routing requirements. Without the complexity, their platform also allows instant payments and exchanges with no waiting time. Answers to these problems have long been in desperate need for blockchain platforms. These new solutions are sure to take Ethereum and blockchain technology as a whole to the next level.
Fast and efficient cryptocurrency payments is clearly a crucial requirement for blockchain to roll out to the mainstream, however the current process isn't straight forward, especially on mobile and whilst on the move. In order to combat this, Liquidity.Network launched their mobile app at the recent EDCON in Toronto. Whilst currently in a private invite-only beta stage, the mobile app promises to make transacting blockchain payments as easy as sending a text message. With the main net set to launch in June, you could be sending instant crypto payments on mobile on your commute to work sooner than we could have expected. To encourage users to join, the platform has no joining fees and is free to use for regular users. Transaction fees are flexible and can be paid by the sender or the receiver.
The network also has plans to launch a decentralized exchange in Q3 2018 that allows off-chain exchanges of crypto, that is as as fast as centralized exchanges, such as Kraken, but crucially does not hold your funds.
The race to fix the blockchain scalability issue is well and truly heating up, Lightning Network, the best known solution to Bitcoin’s scaling issues has come under fire recently with Dr. Emin Gun Sirer stating that Lightning Network was "economically broken" in a setback for Bitcoin’s widely known scaling solution. Which technology eventually solves the problem will open previously closed doors to blockchain technology that is exciting and has the potential to change the world as we know it.
That being said, the uptake of blockchain technology is only as effective as the tools that are available that enable blockchain to expand in reach and usability. One thing is for certain, the scalability issue needs to be addressed and an offchain platform like Liquidity.Network has the potential to be the solution.
It's no wonder that Vitalik Buterin is excited.
