Cryptocurrency Retail Payment Channels are Opening, Will Starbucks, Kroger or Rakuten Lead the Way?
Cryptocurrency sector's mission to finally enter the mainstream still remains a struggle, despite all of the proposed solutions and alleged key breakthroughs. The fact is that cryptocurrency has yet to fix some of the major issues holding it back, and one of the biggest ones remains scalability.
This is a problem that was noticed even before Bitcoin itself was launched, although the concept lacked the solution then, and it still lacks one now. Of course, there were many potential solutions proposed over the years, and most turned out not to be good enough. Some of them do have potential, however, such as Bitcoin's Lightning Network, which is currently being developed by several entities within the industry.
Others have proposed different solutions, such as developing new coins instead of trying to fix Bitcoin's network. One group consisting of the US technologists and academics came up with a project that promises to launch a globally scalable decentralized payment network called Unit-e.
What Is Unit-e?
Unit-e is a new cryptocurrency that has a goal of permanently ending scalability problems. It is funded by a Zug-based nonprofit group called DTR (Distributed Technologies Research), as well as from Pantera Capital. Both, Pantera Capital and DTR representatives have stated that the lack of scalability of the current technology is the reason why cryptocurrency is not being accepted on a wider scale. However, they also believe that Unit-e is quite aware of this and that it used its knowledge to guide its research.
Even so, the project was mostly unknown until recently, and one reason for this is that it wanted to keep quiet until it can gather solid research, and then present it all at once. This alone makes it stand out in the sea of projects that claim to be a quick fix for all of the issues troubling the crypto world. The project leaders did not wish to add to the confusion of the already noisy crypto space.
However, many believe that the project may be on the right track and that developers should not be afraid of experimenting during their research. Scalability is an important issue to solve, which is why it is important to explore any and all possibilities that may present themselves.
Everyone connected to the project — as well as those who are providing support — believe that cryptocurrencies will be a major disruptor of the financial industry, similarly to telecommunications and the internet. Meanwhile, the crypto and blockchain communities are more than ready for cooperation, which will certainly help along the way.
Unit-e project leaders also mentioned that they had to start the project from scratch, which is a good thing, as well as bad. It is bad because it means that every aspect of the project needs to be created with no shortcuts. However, it is also good because that leaves a certain level of freedom for the developers. That being said, their solution is still quite related to scalability of the Lightning Network.
The Lightning Network And Other Potential Solutions
The Lightning Network (LN) aims to add another layer to Bitcoin's blockchain — one which would allow participants to create a network of tunnels that would allow for instant transactions, with no need to wait for them to be processed and stored on the blockchain, at least not while the tunnel is open. In late December 2018, there were reports that the capacity of the LN has increased to surpass $2 million, which was a welcome development during the crypto winter.
Meanwhile, banks have their own ideas regarding how to fix Bitcoin's scalability issues. The BIS (Bank for International Settlement), for example, believes that the solution lies in abandoning the PoW system. This would increase the number of transactions while it would reduce transaction fees. While the bank did look favorably on solutions such as the LN, it still believes that the only permanent solution is shifting away from PoW.
Academics tried to study and point out what needs to change about blockchain technology as well, with one of the latest examples being the MIT-s professor, Silvio Micali. Micali believes that three core aspects of blockchain — security, scalability, and decentralization — need to function perfectly and simultaneously in order to work. However, he sees scalability as a major issue, one which damages the entire system.
Other solutions have been proposed as well, such as Blockstram's liquid sidechains, which may even be a better solution than the Lightning Network as they would not be limited in the amount of channel capacity. However, these solutions currently still remain theoretical, even though they are already under development, and the LN might even be completed, soon.