Competition Heating Over Confirmation Speed, May Determine Long-Term Success
Next year is all but certain to see blockchain technology assume a much greater role across many business and technical sectors, and institutions across the globe are evaluating platforms for potential adoption. Anticipating this move, competition is emerging, usually pushed by development teams, promoting the technical merits of platforms for a range of applications. Of all the metrics that may be used to judge a cryptocurrency, perhaps none are more significant that transaction speed and network fees. It is thus not surprising that teams are making such performance a top priority as well as the centerpiece of their marketing efforts.
Although there is no shortage of blockchain platforms that claim to be very fast, earlier this year Binance reported that Nano, Stellar Lumens, and Skycoin achieved the fastest confirmation times on its servers. Tests from other groups have given high marks to Ripple, EOS, Dash, Bitcoin Cash, and Litecoin. Advocates for these platforms have been quick to publicize these accolades, as they are a strong indicator of scalability and the potential for mainstream use.
Recognizing that open competition for adoption will soon be common, platform advocates have begun to use speed results as a tool to criticize their rivals. For example, earlier this week Colin LeMahieu, founder of Nano, took a shot at Ripple, claiming that XRP was “too slow and centralized” to achieve its goal of widespread adoption by banks. The Dash team routinely touts Instasend as a feature that makes its coin superior to Bitcoin for point-of-sale transactions, and EOS supporters assert that their platform far outperforms Ethereum in the realm of decentralized applications (dApps).
Although there is no doubt that speed is important, using it as a benchmark to grade the quality of blockchain platforms is problematic. Because all major platforms are still under development, confirmation speeds in their final form remains unknown, although it is safe to assume that all will be much faster than at present. More importantly, other factors, such as the programing language for dApps, may prove to be far more significant for potential adoptees. In fact, Any number of variables could be considered more relevant than speed within the context of a specific use case.
As the speed competition heats up, all eyes are on Bitcoin, as this issue is considered the flagship cryptocurrency’s primary challenge. Bitcoin is the only platform that has run into significant problems due to speed limitations, which occurred at the end of last year. The Lightning Network is Bitcoin’s solution to the speed issue, which has been implemented but has yet to see widespread use. Theoretically, this upgrade will enable Bitcoin to process many thousands of transactions per second, thus opening the door to mainstream adoption as a common currency. Should the Lightning Network fail, Bitcoin is all but certain to fail with it.
Once platforms begin to reach their final form, and networks begin to see large-scale use, there is no doubt that speed will play an important role in determining which cryptocurrencies achieve mainstream use. However, for the foreseeable future transaction speed is a secondary concern. Nevertheless, using speed as a marketing tool is likely to continue as more platforms compete for adoption and recognition.
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