The scalability debate is all but over for most people following bitcoin’s August 1st chain-split hardfork, allowing the currency to follow both paths at the same time, but in different coins.
The main currency, bitcoin, will follow Bitcoin Core’s approach of scaling by forming a settlement system through second layer protocols, like the Lightning Network (LN).
Bitcoin Cash, on other hand, is prioritizing on-chain scaling first. That has already given them plenty of capacity, some 8x more than btc, with their problem now being adoption rather than scalability.
Ethereum is to follow both approaches, with equal priority, on the same chain and currency. They plan to scale on-chain to as good as unlimited capacity, something that would be the biggest breakthrough in this space. They are to also scale by utilizing LN like second layer protocols, such as Raiden or Plasma.
Raiden has been in development for quite some time and was showcased at Devcon2 when Heiko Hees, its main developer, showed how it can be utilized in an internet of things context whereby through a Raiden connected smart contract electricity is charged dependent on use.
That protocol has now entered live testing, the final stage before it’s deployed in production. Main-net release might now be as soon as next month, although it is probable they’d hold off until Devcon3 if it’s ready, otherwise it could be as late as January.
Once the protocol is good to use, it may considerably reduce fees and transaction speeds, especially for smart contracts. Requiring no changes from the ethereum protocol itself, it will work as an extension of sorts, with smart contracts or individuals able to tap into the network if they please.
The protocol is intended to complement on-chain scaling through Proof of Stake or Sharding. But the former has somewhat been delayed while ethereum finds much adoption, with their blockchain processing more transactions than any other digital currency, including bitcoin.
It may hit a ceiling next year if this level of growth continues, making such second layer protocols like Raiden an important part of the scalability puzzle.
All decentralized public blockchains are currently hampered by inability to meet full demand for transaction space. Leading businesses either towards not using the public blockchain or towards creating private forks of ethereum.
Developers are, however, working on scalability across public blockchains with the matter considered as top priority because the first to crack it may race ahead due to network effects from added capacity.
That means at this stage, blockchains are not really ready yet for mainstream use, with many comparing them to dial-up internet or earlier.
But if scalability is addressed and if they reach a level where they have as good as unlimited capacity, then they may be ready for prime time when even ordinary services might start using the technology.
To get there first would be the biggest prize for this space. Whether eth will manage it, bitcoin, or bitcoin cash, we will have to wait and see.