The Ethereum blockchain has become known as the platform of choice for cryptocurrency entrepreneurs. The open-source nature of Ethereum, along with its ease of development, has made it possible for cryptocurrency startups to build smart contracts, create decentralized autonomous apps (DApps), and launch new cryptocurrencies with relative ease.
Unfortunately, like most new technologies, the Ethereum blockchain has its share of problems. While there was early praise for the technical innovations of Ethereum, questions have been raised recently about its security and scalability.
After the popular CryptoKitties blockchain game was released on November 28 of last year, Ethereum experienced some of its largest network congestion to date. The CryptoKitties game developers publicly noted that the game had been created as a “key step” in making blockchains more accessible, yet Ethereum’s lack of scalability was brought to light as thousands of pending transactions clogged up the network.
As a result, the Ethereum blockchain has been viewed as being inefficient for many use cases, specifically within the e-commerce sector. The Ethereum blockchain currently supports roughly 20 transactions per second. This is quite low in comparison to the 2,000 transactions per second processed by the Visa global network.
A PUBLIC BLOCKCHAIN BUILT FOR E-COMMERCE
In an attempt to solve the issues facing the Ethereum blockchain, the CyberMiles Foundation has created the CyberMiles public blockchain specifically for the e-commerce sector. The CyberMiles blockchain testnet for developers is expected to launch on March 30.
According to Dr. Michael Yuan, Chief Scientist at the CyberMiles Foundation, the CyberMiles blockchain functions similarly to Ethereum, yet is optimized for e-commerce.
“The basic idea behind the CyberMiles Blockchain is that it’s optimized for different things that the Ethereum Blockchain doesn’t address. Specifically, Ethereum is designed for general purpose computing, while we are optimized for e-commerce, meaning there are areas where we can vastly outperform the Ethereum Blockchain,” Dr. Yuan said.
The most notable feature of the CyberMiles blockchain is its scalability. While CyberMiles is fully compatible with Ethereum – meaning all applications written for Ethereum can be deployed on CyberMiles without any changes – the CyberMiles blockchain is 100 times faster. The Ethereum blockchain is capable of about 15-20 transactions per second, while the CyberMiles blockchain can handle 2,000 or more per second.
POW VS. DPOS
Unlike Ethereum, which is based on a “Proof of Work” concept (PoW), CyberMiles applies a “Delegated Proof of Stake” (DPoS) protocol to ensure faster, validated transactions.
When taking a proof of work approach, “mining” needs to be performed in order to create a group of trustless transactions on a blockchain. Mining serves two general purposes – to verify the legitimacy of a transaction and to create new digital currencies by rewarding miners for performing the previous task.
A delegated proof-of-stake approach, however, validates transactions differently. Like representative democracy, token stakeholders “elect” validators to secure the blockchain network. As a result, transactions are validated faster, making this approach optimal for e-commerce platforms.
While the Ethereum community and its creator, Vitalik Buterin, are planning to transition from a proof-of-work to proof-of-stake approach, Dr. Yuan points out that this will be a lengthy transition process due to conflicts of interest and politics within the Ethereum community.
“Ethereum developers have been trying to resolve the scalability problem through proof of stake, but it is a very slow process for them due to disagreements inside the community,” said Dr. Yuan. “CyberMiles has started from the ground up and can afford to do things differently by taking a delegated proof of stake approach from the start.”
Indeed, the political impact of taking a proof-of-stake approach seems to be one of the factors delaying innovation on the Ethereum blockchain. While the Ethereum community thinks the switch to PoS will help with scaling issues, it will also result in a loss of rewards for miners.
Vitalik Buterin mentioned in August of last year that the first version of Casper – a hybrid proof-of-stake/proof-of-work algorithm – would be released soon. Currently, the Casper update is in the testnet stage, and there are plans to unroll the update this year, but a specific date has not been set.
CREATING A MORE SECURE BLOCKCHAIN: EIP 867
While scalability is one of the main issues facing the Ethereum blockchain, other problems involving security have also been brought to light. Even though Ethereum has become the blockchain of choice for launching Initial Coin Offerings (ICOs), many hacks and stolen funds involving ICOs launched on the Ethereum blockchain have been reported. For example, the Parity hack of November 2017 froze over US$280 million in crypto assets on the Ethereum blockchain.
According to a recent report titled “Finding The Greedy, Prodigal, and Suicidal Contracts at Scale”, about 34,200 current Ethereum smart contracts worth US$4.4 million in Ether are vulnerable to hacking due to poor code that contains bugs.
In an attempt to fix this problem, a controversial code proposal called EIP 867 was introduced to the Ethereum community to make it easier for Ethereum users to reclaim lost Ether by outlining clear requests made to those who maintain the technology.
Yet while some users think that refunding lost Ether is acceptable, some key players in the Ethereum community think differently, believing that this goes against the Ethereum community’s values. One core Ethereum developer, Yoichi Hirai, has already stepped down from his role as code editor in response to legal concerns surrounding EIP 867.
While the controversy around Ethereum’s security issues continues, the creators of the CyberMiles blockchain have implemented their own version of a lost fund recovery mechanism similar to that of EIP 867, along with other safeguards that prevent basic programming errors to occur when handling money.
THE FUTURE OF E-COMMERCE
The creators of the CyberMiles blockchain believe that blockchain technology and decentralized marketplaces will revolutionize the e-commerce sector. However, getting to that point has been a challenge due to the scalability and security issues associated with the Ethereum blockchain.
“By starting from the ground up, within a smaller community, the CyberMiles Foundation is able to optimize the features that Ethereum is currently trying to achieve. We believe this will have a large impact on the e-commerce market and we are excited for the future of blockchain technology,” said Dr. Yuan.