Invention of Bitcoin, was a major breakthrough combining several fields including finance, computer networking and cryptography. It inspired thousands of similar projects, which were either direct forks of Bitcoin or attempts to build better solutions based on new approaches. Today, there are around 14,000 cryptocurrencies in existence, and everyday this number increases, while some of them become worthless or disappear over time. New projects could pop up anytime, striving to deliver better performance. However, all these projects share some basic common features based on blockchain technology.
Common Features of Altcoin Projects
All these altcoin projects incorporate a blockchain, which is an immutable set of records of all the transactions performed since the inception of that particular coin.
Coins are either generated while processing transactions (minable), or generated in advanced (pre-mined), in the beginning. This has also lead to the categorization of two types of algorithms, known as Proof of Work (PoW) and Proof of Stake (PoS).
Some coins promote equal participation but others, such as masternode coins maintain a clear distinction between normal users and transaction processing entities, known as masternodes.
Some Issues of the Common Features
Let's take the concept of blockchain. Blockchain must include all the transactions performed since the very beginning of that particular cryptocurrency. Inevitably, this leads to the problem of increasing the size of the blockchain over time.
Most PoW algorithms consume a lot of electrical energy to operate. The best example is Bitcoin network, which is said to have consumed a total of 43TWh in 2019. This is slightly more than the annual energy consumption of New Zealand. PoS algorithms were invented to fix this problem, but that too was not totally free from other issues. Coins with PoS algorithms can have a higher chance of being non-decentralized.
When we consider the user participation, most users don't own high-end computers or dedicated hardware (such as ASICs) required for mining or maintaining masternodes. So, they rely on a few powerful computers on the network, operated by a limited number of entities, and that too can lead to non-decentralization.
Let's Try to Fix the Issues
Farewell Blockchain, Welcome BalanceDB!
Blockchain is the central technology, which everything related to cryptos is based on. It surely is a fantastic piece of innovation, but can't there be a better alternative? For example, instead of trying to record all the transactions from the beginning to the present moment, what if we saved only the individual balances of all the users. So, if this is possible, then it becomes something quite similar to a bank balance database. Obviously, this would be much smaller in size. Anyway, we still need to come up with appropriate techniques to handle consensus and integrity after each transaction. And, the participants will just have to maintain synchronized copies of this database.
This database grows only with the addition of new users, but not with the addition of new transactions every moment. When taking into consideration that the current blockchains grow with the addition of both new users and new transactions, the database approach will result in smaller sizes. And, the decentralization can be maintained using appropriate techniques, such as real-time syncing between multiple copies etc.
PoW, PoS, What's Next?
Problems associated with PoW and PoS could be fixed using a new approach with interesting features. This would be a form of PoW but with a maximum limit on the network hash rate. If a few miners with high computing power join the network, it will reach the maximum limit very soon, and the network will prevent new miners from joining in. However, if miners with low computing power join the network, this maximum limit will not be reached until a large number of miners join in. So, if such a limit is imposed, that will encourage using low power devices by a large number of miners. Consequently, it will help improve decentralization.
MNOs too Can Play a Key Role.
One of the key requirements of the miners or validator nodes is being always online. So, if someone could come up with an altcoin targeting the MNOs (Mobile Network Operators), that would be an ideal choice. This is because all of our phones are always connected our MNO's cell towers. MNOs could make use of their subscribers' always connected devices to delegate the mining process. MNO itself could act like a mining pool and the participants of that pool will be the mobile subscribers of that particular network. Obviously, this requires completely new data transfer protocols that can continuously maintain the connection, between the mobile devices and the MNO, over the mobile network. Alternatively, it can use the existing internet data plans that we use to browse internet via our mobile devices.
This approach will definitely reduce mining equipment costs and it will also help the introduction of new business models in the telecommunication industry. For example, MNOs can provide their telecom services at a subsidized rate to those users who are willing to participate in the mining process. It also helps further improve
Innovate! Innovate! Innovate!
Those are some new ideas that could revolutionize the cryptocurrency industry, and consequently, change even our lifestyles in the most unimaginative way. So, crypto startups! what are you waiting for?
