Blockchain second-layer protocols

The Limitations of the Blockchain

Blockchain technology was a major innovation.  The original Bitcoin whitepaper, authored by the pseudonymous Satoshi Nakamoto, described the first system that made a fully decentralized digital ledger system possible.

This system was designed to transfer the burden of trust in a digital ledger system from a single, centralized authority responsible for building and maintaining it to a set of cryptographic algorithms, blockchain protocols, and incentivized nodes.

However, the blockchain is not a perfect solution.  Some of the most common complaints about the blockchain include:

Scalability/Throughput: Blockchains produce blocks with a set maximum size at a certain rate.  This means that the blockchain has a maximum capacity or throughput of transactions that cannot be exceeded. Transaction Speed: Transactions are added to the distributed ledger as part of blocks.  These blocks are created at fixed intervals, transactions may not be included in the next block, and blocks (and the transactions that they contain) are not fully trusted until several blocks are built on top of them.  All of these factors delay a transaction’s inclusion in the blockchain’s digital ledger. Overhead: Blockchains require the entire blockchain network to come to a consensus for a block or transaction

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