#Blockchain, the technology that digital currencies like #Bitcoin are based on, ought to be ideal for business applications – if only it was fast enough and coped better with scale. Bitcoin, for example, could only cope with a fraction of the numbers of card transactions that #Visa or #Mastercard handle. As a transparent, decentralized shared ledger that can’t be changed, blockchain systems should be ideal for, say, tracking products all the way through a supply chain, whether that’s car components, fruit and vegetables or pharmaceuticals, without waiting for all the updates to go through some central approval process.
“We think blockchain has huge potential across a whole set of industries,” Azure CTO Mark Russinovich told TechRadar Pro. “Typically, enterprises want to use blockchain in a consortium environment, where there are multiple parties, different organizations or different groups in the same organization who want to get rid of the friction of a centralized ledger, or a consortium where there’s no single authority that everybody trusts to maintain the source of truth.
“Blockchain, distributed ledger, gives them an opportunity to get rid of the middleman and have full transparency about the interactions between different organizations.”
Key problems
But businesses that have been trying out #blockchain systems have been running into some key problems that #Microsoft ’s new #opensource #CocoFramework is designed to solve. The first thing is to get rid of the compute-intensive proofs of work that make #Bitcoin mining use so much energy, and slow down transactions because everyone in the consortium has to calculate them all.
“If you’re using a proof of work like the open source Ethereum ledger you end up having very high latencies and low throughput and the consensus algorithms take time to converge,” Russinovich explained.
Ethereum mines blocks about every 10 seconds, so the latency is 10 to 20 seconds and the throughput only 15 or 20 transactions a second, he estimates. In practice, the latency can be close to a minute. “If you want to wait for a transition fully committed on the network, you're typically waiting for multiple blocks to be mined on top of the one you're interested in, to make sure it's not going to be undone because there was a split in the network and another longer blockchain ends up winning, invalidating the one with your transaction in.”
This is further complicated due to smart contracts that need to refer to information that changes over time – like currency rates or LIBOR – or to information from a database that’s only available inside one company, because the validation nodes calculating the same transaction won’t get the same information at the same time if they don’t have access to the database.
Managing who’s part of a blockchain consortium is also complicated, because you have to distribute keys to new members – and try to remove them from anyone who leaves.
http://www.techradar.com/news/microsoft-is-making-a-blockchain-thats-fit-for-business
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