Taraxa AMA #2:
Enterprise blockchains, Taraxa’s product development, and more.
Welcome to the next installment of our AMAs where we select the most relatable questions from our Community’s submissions.
Today we’re here with our CEO and Co-Founder to chat about Taraxa’s applications, as well as broader technical concerns about the promise and applicability of the distributed ledger technology across the enterprise sector.
Q.1: From a monetization or market opportunity standpoint — what are the industries that have the greatest potential for Taraxa, and what would be some of these use cases?
SP: As an industry-agnostic solution, we are now looking at multiple sectors that range from automated retail, construction, healthcare, to industrial equipment and casino security in terms of Taraxa’s horizontal applications. With that in mind, we are targeting a number of enterprise functional areas, such as production and procurement, distribution, asset management, communication, and regulatory compliance.
At this point, we are focused on R&D and product development in identifying the most problematic pain points involving the quality and collection methods of operational transactional data. Eventually, we were able to extract the first use cases that our platform is ready to tackle right away adding immediate value to the business. We currently have customers in Japan in arcade rentals and automotive manufacturing, and in the US in construction and high technology. Our solution is highly scalable and we expect it could be rapidly replicated across industry sectors.
Q. 2: In your opinion, what fields will blockchain spread in the global supply chain?
SP: If you look at the global supply chain and manufacturing as it is today, you immediately spot the growing complexity of intra-organizational interactions. Supply chains are the foundation of every manufacturing business, capable of making use of blockchain’s distributed ledger structure and block-based approach to aggregating value-exchange transactions to improve supply chain efficiency. And all the emerging technologies — blockchain is no exception here — are conceived to simplify and optimize track-and-traceability, product safety, and asset management. For that matter, we are specifically fascinated by the convergence of blockchain and IoT. And the recent survey numbers only prove the point: Gartner predicts that by 2023, 30% of manufacturing companies will have implemented Industry 4.0 pilot projects using blockchain.
However, there is a common misconception of blind belief in the ability of technology to discern the truth. The critical problem here is that people expect too much from blockchain thinking that it can be a source for actual truth, while in fact, it is only a source for commitments. This goes back to the data veracity problem, and the garbage in/out problems. For that matter, blockchain will never be able to guarantee the veracity of data, because there’s always the issue of data quality at the source. At the same time, a lot of current solutions is that they try to use blockchain to guarantee off-chain truths, which is not possible without other complex companion mechanisms. So a big contributing factor is really failing to set the right expectations — you set it up to fail basically because you’re trying to achieve the impossible. The good news is that for the purpose of, say, fraud prevention and performance tracking, it might suffice to have responsibilities of the committing entity (person, company, device) immutably traced and recorded into the ledger. And that’s the real value proposition of distributed ledger tech.
Turning to the question, I believe that tracking critical supply chain parameters, components quality, asset maintenance, and regulatory compliance are the realms where blockchain will see the greatest adoption for its capability to cut time and costs, and tracking the stakeholder’s performance.
Q.3: Is there a possibility that large companies will adopt public blockchains instead of private or consortium types in the future? If yes, if not, why?
SP: Indeed, there is a belief that public blockchains require substantial computational power and lag in terms of either scalability or security. Historically, Public Permissionless Ledgers came first, and it wasn’t until later that private chains were introduced by those who were concerned about control over the network, privacy, performance, and cost. Yet, if we look at it closer, such fears are groundless. Speaking of control over the network, if you have total control, then you don’t really have immutability or trust, so that defeats the purpose of having a blockchain in the first place. Much more importantly, a smaller network is by design a network where all the players are in the same industry and doing business with one another, and it will inevitably become highly susceptible to bribery. Whereas with a large public network, where most of the players aren’t in your industry and basically bipartisan, things are far less susceptible to bribery. For privacy, those concerns are a bit overrated, since if you only store hashes (not data, cannot be reversed back to data) and signatures there’s no data to be stolen. You can even randomly encrypt them so you cannot even trace activity, so a public chain is just as safe. The myth about performance is that the only way to go faster is to use a smaller network. Actually, you can go faster with a plethora of technologies without sacrificing security. For Taraxa’s consensus algorithm, we found a way to eliminate the scalability/performance trade-off by using the block DAG topology that basically allows to increase throughput without sacrificing security. The block DAG structure is inclusive, in that it is able to accept all branches, hence increasing the overall throughput. The security challenge is resolved by looking at the pointers each block uses to point at multiple parents as votes that translate into a weight rating, called the GHOST rule. To support the role of smart contracts in device transactions, Taraxa’s unique use of speculative concurrency in the construction of a concurrent VM drastically boosts execution speed, saving precious time for the entire network of full validating nodes.
Eventually, once the performance problem is solved, so is the cost, because cost is a function of performance. If we look at the most outrageous cost instances incurred on the ETH / BTC networks, those are due to network congestion, and since their performance is so slow it is almost always congested.
On a broader scale, I believe that over time, despite the existing limitations in the enterprise context, public chains with an adequate approach to the scalability vs. throughput vs. privacy will progress to larger adoption enterprise-wide. Also, we must understand that the more blockchains there are, the harder it gets to connect to other networks later on to fully benefit from DLT’s value proposition in terms of creating novel business models and foster cross-industry partnerships. Again, the problem with numerous separate networks is they create silos of data. While with public blockchains, we will eventually have fewer blockchains altogether, especially considering the work done on the interoperability side these days.
That’s a wrap for today! We thank everyone who’s actively participating in the discussion, and waiting for the next round of questions in Taraxa’s Telegram chat.