GoNetwork - Tackling the Scalability Problem

cryptotaofficial (56)in #blockchain • 7 years ago

One of the serious problems of blockchain architecture is that with an increasing number of active participants in the network the speed of transactions slows down. It's related to the fact that to complete a transaction the majority of the participants in the network have to confirm that the transaction is valid. This confirmation requires each participant to make independent computations, which takes time. At the same time, this very architecture guarantees the reliability of blockchain transactions, the fact that's it impossible to tamper with them. Meanwhile, this problem of low transaction speed which exacerbates when the network is getting bigger is well-known in the Ethereum ecosystem by the name of "Scalability Problem." The experts consider the problem of scalability a major roadblock preventing wider adoption of cryptocurrencies as a means of exchange. This is understandable. For example, while Visa makes 1667 transactions per second, Ethereum can manage only 20 transaction per second, and even this number will significantly go down if the number of transactions and participants in the Ethereum network reaches the level of the regular active payment system due to the problems described above.

GoNetwork, the winner of ETHWaterloo - the world biggest Ethereum hackathon, offers both a technological solution to the problem of blockchain scalability and a use case, showing how their technology works in real-life payment infrastructure under high workload conditions. Let's first take a look at the implementation.

The use case addresses the problem of the secondary market for virtual goods. This is a market that emerged with an increasing number of mobile applications including multiplayer online games, where the users purchase "virtual items" - the game paraphernalia useful within the application. While the mechanism of buying the items directly in an app is simple and streamlined, there is another secondary market for virtual items where players trade items among themselves and the prices are naturally regulated by supply and demand. In 2015 the black market for virtual goods was worth $5 billion; at the same time, it remains a chaotic marketplace with no reliable, risk-free way to strike the deals and conduct transactions. An obvious demand for the organized marketplace for "virtual goods" led to the creation of the GoExchange platform - a decentralized e-commerce platform utilizing the technologies of GoNetwork.

The technology itself is based on the method of state channels. State channels allow participants to conduct a number of quick off-chain transactions within a smart contract. The smart contract locks a total balance of transfers between the participants. Since nobody can access tokens in a smart contract within state channel, this series of transactions just as secure as if they were conducted on-chain - within the whole blockchain infrastructure. After completing the series of off-chain transactions, they are serialized, signed by both parties and sent for confirmation to the blockchain which verifies a total balance. The practical implementation of the off-chain solution to the Scalability Problem makes GoToken - a cryptocurrency offered by the platform a viable alternative means of exchange, applicable to the real high-workload scenarios.