Blockchain Beyond Bitcoin
As mentioned in Chapter 8, there are currently more than 500 alternate blockchains, most of which are simple variants of Bitcoin.
Indeed, the blockchain instantiates a novel distributed consensus scheme which allows transactions, and any other data, to be securely stored and verified without the need for any centralized authority. Note that the entire community has been in search for a simple, scalable, and workable distributed consensus protocol for a considerable amount of time . For instance, PoW-based blockchain is a permissionless system that does not require any identity management, and could scale to millions of miners. We contrast this to existing Byzantine Fault Tolerant (BFT) proposals, which are permissioned systems (i.e., they require the knowledge of the IDs of the miners prior to the start of the consensus protocol) and have limited scalability provisions.
However, Bitcoin's PoW has been often criticized due to its considerable waste of energy; indeed, the cost of mining per confirmed transaction is estimated to be 6.2$ at the time of writing. Existing studies also show that Bitcoin’s blockchain can only achieve a modest transactional throughput bounded by seven transactions per seconds. To remedy the limitations of PoW, a number of alternative consensus protocols have been proposed, such as Ripple and Ethereum.
In this chapter, we overview a number of interesting blockchain proposals that are currently acquiring considerable attention in the media/literature.
Figure 9.1 Sidechains are blockchains that are interoperable with Bitcoin and with each other. This allows assets to move freely across all blockchains.