Vitalik Buterin, ethereum’s inventor, stated that Plasma implementations are almost ready, with Buterin previously stating there are at least three implementations.
The comment was made in the context of a nation potentially thinking of cryptonizing their currency. Olivier Janssens, an early bitcoin adopter, gives a number of options, with Buterin stating:
“I’d obviously recommend ERC20, but launch with some well-functioning Plasma chains. Maybe each commercial bank could run one?”
With scalability currently a fairly prominent concern and a number one priority, some found Buterin’s recommendation as surprising. Buterin says:
“The base layer for a central bank currency having $5 txfees is ok; it is after all only a settlement layer. And with sharding the settlement layer can be used for more and more direct txs.”
Plasma, if you recall, is a blockchain within a blockchain. An easier way to think of it, however, is as a method to bundle transactions. So if you bought a cryptokitty yesterday and you foolishly bet on England to win on Augur as well as maybe collateralized eth for some Dai, instead of each and every one of those being an ethereum transaction, all three are are sort of kept in memory in this other chain and then eventually all three are settled in just one ethereum transaction.
All of that is done in a fairly trustless manner with some relatively complex crypto hashing, which is basically and in a very simplified way giving each of those transactions a “public key” and a “private key” to correspond for their “location” in the “memory” and to tie them up to the public blockchain.
Plasma itself has been in development for now around a year, and an improved version called Plasma Cash sort of does to Plasma what sharding does to eth by kind of parallelizing the merkle trees.
According to Buterin, Plasma is almost ready, but we don’t know whether that means soon, soon-ish, or two weeks. That is whether “almost” means a month or many months.
He also apparently thinks a national currency can run on eth sort of now or soonish when Plasma is out, which would be ambitious in our view.
However, the current state of blockchains does have the capacity to replace something like Swift which is mainly used for inter-bank payments, and with second layers it might be able to handle a small country’s currency.
But, Plasma is sort of bleeding edge. It is very new tech. It will need some time to prove itself and to be refined. It does have some downsides which can be mitigated but experience first needs to tell us what part of Plasma is fine and working well and what part might need some refinements.
All of which means in our view, where a national currency is concerned, now is the time for studies, prototypes, tests, real life pilots, getting a feel, knowhow and so on, or in internet analogy, putting only text up rather than images, videos etc.
Then, by the time all those pilots are done, ethereum’s public blockchain should be ready in a way it can properly handle significant demand.