The blockchain revolution is picking up steam in 2019. While virtual currencies are one of the more widely known applications of blockchain, blockchain technology in business is not only for bitcoin and other cryptocurrencies. For a very quick refresh for any who are unfamiliar with blockchain technology, blockchain is essentially a time-stamped database of transactions managed by a decentralized peer-to-peer network of computers. In other words, it is a distributed ledger that enables automated, independently-verified transactions. Transactions are verified through the process of mining, where individual nodes – or computers – receive payment once they have evaluated and confirmed the transaction – regardless of the outcome produced by the transaction. Thus, the work of confirming transactions and maintaining the digital ledger is distributed across the peers in the network.
Because the record of each transaction remains available to the network, blockchain-based transactions hold an elevated level of transparency and trust impossible to replicate with any centralized system. From the aforementioned cryptocurrencies to smart contracts and legal applications, blockchain is poised to have a transformative effect on industries where reliability of data and information is pivotal.
Public vs. Private Blockchain
Not all blockchains are created equal, and there are important benefits and limitations of various types of blockchain platforms. To illustrate this at a high level, let’s consider public blockchain networks as compared to private, typically permissioned, blockchain networks. With a completely open-source code and architecture, public blockchain is as transparent and decentralized as any system can be. Any computer can mine transactions for any party.
In contrast, private blockchains require permission for computers to become network nodes and mine transactions. While public blockchain networks achieve maximum transparency and flexibility, private blockchain wins in terms of speed, efficiency, and security. For enterprise companies, private permissioned networks provide the lowest level of risk with maximum output and efficiency. Even in private permissioned networks, there is opportunity for improvement as we explore how to make blockchain work better for business.
Accelerating Throughput in Permissioned Blockchain Networks
A recent whitepaper produced by IBM and Samsung SDS explores a recent blockchain development that is sure to make waves for permissioned blockchain networks. The whitepaper, Accelerating Throughput in Permissioned Blockchain Networks, details the implementation and testing of Samsung’s Accelerator in increasing transaction speeds for permissioned blockchain networks. Accelerator, which is built in to Samsung’s Nexledger, is a software component developed by Samsung SDS that improves transaction throughput.
The whitepaper also explores how accelerator enables enterprise-wide blockchain technology and specific use cases that provide insights for better understanding industrial blockchain platforms. Though focused on testing Accelerator within Hyperledger Fabric specifically, this development has implications even beyond the scope of the project. It addresses one of blockchain’s critical obstacles to enterprise-level adoption and reduces risks inherent in slow transaction throughput. The comparatively low transaction rates that some blockchain networks currently deliver represent a consistent challenge to implementers of blockchain solutions. It is estimated, for example, that the public Bitcoin network achieves a dismally low rate just of 7 transactions per second (TPS). Though average TPS rates are much higher for private blockchain networks, accelerator has proven effective at substantially increasing the network’s TPS. Just how effective did Accelerator prove? It demonstrated meaningful 10x performance improvement in transaction throughput.
To better understand why this is key, it’s helpful to consider use cases for Accelerator. Starting with areas of limitations, contraindicated uses cases, and moving into optimal use cases, we can better understand the real-world impact Accelerator can have for advancing blockchain technology. Use cases explored include Internet of Things (IoT), Financial Services as well as a summary of contraindicated use cases.
Contraindicated Accelerator Use Cases
Sometimes it helps to define our boundaries and limitations before we can truly take advantage of a new innovation or technology. As outlined in the new whitepaper, there are some instances where accelerator is not quite as suitable. One such case occurs when many simultaneous, concurrent transactions are working to update a very small number of addresses with the same keys. Put simply, these cases often feature a large number of conflicting transactions in a very short time span. In such cases, the many interdependent concurrent updates of the same key can lead to potentially many update conflicts which in turn create a situation where Accelerator performance may decrease. In the case of some stock exchanges powered by blockchain technology, for instance, many concurrent requests from a large number of clients’ accounts need to be recorded or netted or settled with respect to a small number of accounts. This results in a relatively small number of transactions that are “non-conflicting”, thereby minimizing the suitability and impact of Accelerator.
Accelerating Throughput in IoT
In contrast to the above scenario, IoT devices and/or sensors applications represent a class of applications that exhibit characteristics especially suitable for Accelerator. Specifically, IoT applications require high throughput due to potentially extremely high volumes of transactions and, simultaneously, particularly suitable for acceleration due to transaction independence.
Accelerating Throughput in Financial Services
Similarly in the Financial Services space, transaction correlations and possible update conflicts are increasingly likely. For instance, individual bank account holders often initiate money transfers that may have transactions with many correlations. Due to the likelihood that many transactions might be associated with a particular account, we can potentially encounter transaction update conflicts that are trying to update the same key concurrently at about the same time. In most practical scenarios in this Financial Services, any conflicts and concurrent updates will typically spread over longer period of time – making the use of Accelerator still suitable for the category.
Beyond even these use cases, accelerator’s performance has broader applications and potential for permission blockchain networks. As blockchain technology continues to mature, throughput speed will be under the microscope as an area to maximize investments and performance. Learn more about how Samsung Nexledger gives enterprise a no-limits approach to growth.