How Will Blockchain Technology Enter the Mainstream? | Writers Contest Winner #4

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Felix from the æternity community believes that the only way blockchain can go mainstream is through wider cryptocurrency adoption. Here is why.

If we think about what blockchain really is, we will come to the conclusion that blockchain has actually enabled two main innovations for us:

  • A (crypto)currency;
  • A ledger to store data.

I am confident that the currency aspect of this technology is the more important one.

There are a few reasons for this.

First of all, a larger market cap results in a safer ledger. That’s why the Bitcoin and Ethereum blockchains are excellent ledgers for valuable data. They enjoy the largest concentrations of mining power that secures their networks and makes attacks very costly to execute.

Second — currencies have high-frequency use cases. Using cryptocurrencies for payments and/or as a store of value is the most fundamental function of blockchain protocols. Bitcoin is currently used mainly as a store of value due to its scalability and deflationary characteristics, while ethers are still not widely used for payments, but were at the center of the ICO boom in 2017 and 2018.

Thanks to Satoshi Nakamoto, who invented Bitcoin 10 years ago, the gates of financial freedom were opened. Cryptocurrencies are an essential tool for billions of people in their fight against dictatorships and out-of-control inflation. They can also be used to make international payments with super fast clearing and settlement and with improved privacy.

However, this is not enough. Bitcoin is still too slow and inconvenient. Ethereum’s ethers are actually a better currency for value transfers. But again due to scalability issues, they are not widely used for payments.

This makes cryptocurrency still less preferable for payments than fiat and gold. We need new features to solve real-world problems. That is the only way for blockchain technology and cryptocurrency to enter the mainstream.

What Is The Solution?

The experts from æternity are figuring it out. æternity supports a cryptocurrency on its own, called AE (AE tokens) and also incorporates smart contracts, a naming system and oracles. For decentralized consensus building on-chain, æternity uses BitcoinNG, which was developed in Cornell University.

It allows for ~8 times faster transaction speed than Ethereum and is ~16 times faster than Bitcoin!

For unlimited scaling, æternity uses state channels, which is again incorporated in the core protocol and not made available by a smart contract (which complicates use significantly). Through state channels, anyone can make unlimited AE token transactions and send data completely free and in real-time. Opening and closing a state channel requires two on-chain transactions, but any transactions done in state channels are free, and very importantly — private.

What makes state channels different than payment channels is that apart from keeping a state of balances — how many AE tokens you and I own — it can also store smart contract code.

This means that users can run a smart contract between themselves completely privately, without affecting the performance of the main chain. This is revolutionary!

Finally, the integrated naming system will also allow more user-friendly wallets — sending tokens to human-readable names instead of to long strings of numbers and letters. This will make decentralized applications that run on æternity much more usable by a mainstream audience.

You are all welcome to join æternity and participate in its building process. It really is a project to keep an eye on 😉

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