Just How Much has the Blockchain Industry Scaled up in 2021?
2021 has been a watershed year for blockchain technology, with several new trends prompting a rethink of financial possibilities. Non-fungible tokens (NFTs) in the Metaverse, Exchange-traded funds (ETFs), and Decentralized Autonomous Organizations (DAOs) have become mainstays bringing with them more adoption of crypto. These innovations have seen businesses worldwide adopt blockchain solutions bringing about considerable investments in the space.
Financial payment company TripleA estimates that the total number of crypto users exceeds 300 million. This claim is substantiated by data provided by Chainalysis, which shows that as of Q2 2021, global adoption was at least 880% higher than 2020.
Growing Adoption Poses Scaling Problems
As more users and investors come into the crypto ecosystem, the problem of scalability poses a challenge. As adoption grows, the need for faster transactions and increased throughput also goes up. However, scaling up in the industry brings up the age-old belief of the blockchain trilemma.
The blockchain trilemma refers to the widely held notion that decentralized networks can only provide two of three benefits (decentralization, security, and scalability) at a time. The industry is rife with examples of this challenge.
Bitcoin can only transact around seven transactions per second (TPS) with its decentralized and secure system. Ethereum has a throughput not greater than thirty TPS. On the other hand, Enterprise blockchains like Hyperledger’s Fabric are safe and can handle high transactional throughput but are centralized.
FTX CEO Sam Bankman-Fried (SBF) praised the current scaling efforts but pointed out the need for more to be done. He shared his thoughts on Twitter, where he detailed a possible roadmap for the industry in 2022.