Vitalik Buterin, Ethereum’s inventor, stated the network will scale to Visa levels capacity in just two years on an interview at TechChrunch 2017.
After defining blockchains as “a decentralized system that contains some kind of shared memory.” While smart contracts as “a computer program that directly controls digital assets.” Buterin was asked about a topic which has dominated this space for the past three years, scalability.
We transcribed his response and quote it below in full for the record. Responding to the interviewer stating there was a scaling issue – even to just handle Visa levels let alone every smart contract – that it wasn’t going to work if everyone is running a copy of every program on their computer, Buterin says:
“Yeah, totally. Bitcoin is currently processing a bit less than 3 transactions a second and if it goes close to 4 it’s already at peak capacity. Ethereum, over the last few days, has been doing 5 a second and if it goes above 6, then it’s also at peak capacity.
On the other hand, Uber on average has 12 rides a second, PayPal several hundreds, Visa several thousands, major stock exchanges tens of thousands, and if you want to go up to IoT then you’re talking hundreds of thousands and if you want to go up to non-financial applications – so for example there’s a platform called Leeroy, which is basically just twitter on a blockchain – then we’re talking about hundreds of thousands, possibly millions.
There is a gap from here to there. And right now I think there is institutional hype in this space and just public hype. So when you have Vladimir Putin knowing what blockchains and ethereum are, and Paris Hilton going out promoting ICOs on Twitter, that’s peak hype.
A large part of the reason why a lot of this hasn’t materialized into action yet is precisely because of some of these technical obstacle that make blockchains – you know, work okay for some niche use cases, but not really work well for mainstream use.
Our team is working very hard on various kinds of scalability solutions, so you hear about buzzwords like Plasma, Sharding, State Channels, Raiden. There are various newer ones like Prune (?).
All of these are various different ideas that do try to break through this fundamental barrier. That try to either create blockchains that still maintain a large amount of security without requiring everyone to literally process everything.
So if you think about it, one extreme is one guy processes everything, which is today’s world. The other extreme is everyone processes everything.
Well, what if you can get square root of everyone, so like 500 people processing each transaction, you still get enough decentralization and security for everything you need, but suddenly it’s efficient enough that works for stuff in the real world.
The other kind of strategies are strategies that try to use the blockchain more intelligently. One of the analogies Joseph Poon from Plasma uses a lot is the idea of the blockchain as a court system.
Blockchains are great at securely resolving disputes and currently the way naive applications work is they just put every single transaction on the blockchain. But what you could do instead is you could have systems where people send messages – that I call kind of tickets – digitally signed messages that are off-chain by default, but where the blockchain only gets used in the specific cases where there’s a disagreement.
So if I have 100 ether and I send you 100 ether, that might never go on-chain, but if I send you 100 ether and then you claim I never sent you the money, or I claim I never sent you the money, then that’s a a transaction where we have a dispute and I could actually push it down onto the blockchain and we could still have a guarantee of security.
All these approaches have their own trade-offs and there is a huge amount of incremental technical work involved in figuring out what the right trade-offs are, but there starts looking like a direction that’s much more promising.”
Naval Ravikant, AngelList’s CEO and the interviewer, asks how far along are we as far as scalability is concerned, with Buterin stating:
“For things like Visa, I’d say a couple of years. So maybe one year when we start seeing prototypes that have a lower security level, but are still secure enough for major organizations to start doing proof of concepts on. And a couple more years for these solutions to really hit mainstream.”