Today’s financial and socio-political systems are dependent on transactions, contracts, and their records. Transactions and contracts safeguard corporations’ assets and set boundaries. They create, authenticate identities and record corporations’ events. They manage interactions between individuals, corporations, societies, and countries. They also steer both decision-making processes and drive social action.

In the past, transactions and contracts were not maintained up-to-date despite the digital transformation ushered in by the Internet. These crucial structures operated much like rush-hour gridlocks trapping a Formula 1 car.

2008 was a turning point with regard to how transactions and contracts could be created and stored. The double spending problem — a difficult challenge for a long time — was solved by the Bitcoin and its underpinning Blockchain technology for the first time.

As an open, P2P (peer-to-peer), and DLT (Distributed Ledger Technology), Blockchain can record transactions between two anonymous parties in a provable, transparent, and immutable mode. Being a decentralised technology, Blockchain eliminates third-parties during the creation and storage of transactions.

How conventional Blockchain works

When new transaction is created on a network, it is broadcasted to the entire P2P network. After broadcasting, a majority of the nodes/miners on the Platform execute consensus algorithm. If you are using Bitcoin protocol, then the nodes will execute the PoW consensus algorithm. Other Blockchains such as Ethereum are considering the PoS consensus algorithm.

The consensus algorithm executed will evaluate and confirm the history of the individual block that has been proposed. If the majority of the nodes/miners agrees that the history and signature of the block is valid, then a new transaction is permanently written to the ledger. This results in a new block being appended to the chain.

On the other hand, if the majority of miners do not agree, then the transaction is denied, and a new block will not be added to the Blockchain. The diagram below summarizes the mechanics of how Blockchain works:

What is the problem?

Bitcoin — which was primarily unveiled as a cryptocurrency — was limited in its use cases. When Ethereum was launched in 2015, it heralded a truly trustless economy where any industrial problem could be coded into a smart contract.

If the number of start-ups that have successfully deployed and those considering cryptosystems is anything to go by, there is a valid reason to believe that the technology is primed to go mainstream. Still, many transactions have largely remained inefficient, expensive, and vulnerable on current Blockchains.

Worldwide transaction volumes — fuelled by the growth of online banking, e-commerce, and in-app purchases — are exploding and will undoubtedly amplify the inefficiencies, complexities, and costs on current Blockchains. The growth of IoT (Internet of Things) is expected to soar transaction volumes further on these platforms.

Already, there are signs that conventional Blockchains are teetering towards failure. While Bitcoin revolutionised cryptocurrency, transactions have been sluggish and require massive computing power. Ethereum has also been experiencing the same scalability challenges.

The problems plaguing conventional Blockchains can be summed up in terms of:

Network;

Governance; and

Software

1. Network problems

In traditional Blockchains, transactions are sluggish. For example, the theoretical maximum speed for Bitcoin is 7 tps (transactions per second). However, in reality, the Bitcoin network can only achieve a paltry 3 to 4 tps. On Ethereum network, the maximum speed that is achievable is 20 tps while Visa can achieve 1,667 tps and PayPal 193 tps.

The problem of speed in these Blockchains is attributable to their consensus algorithms. The PoW (Proof-of-Work) and PoS (Proof-of-Stake) used in Bitcoin and future Ethereum confirms blocks one by one. This not only leads to wastage of computing power and scaling challenges.

If the performance of Cryptokitties — a smart contract and DApp that runs on Ethereum — is anything to go by, then future creation and deployment of commercial DApps will remain a mirage.

2. Governance problems

The unveiling of Blockchain was supposed to usher in a truly decentralised society. However, conventional Blockchains have been teetering towards centralisation. Today, more than 45% of Bitcoin’s mining hash rate is held in China. This makes the network vulnerable to a 51% attack.

Consider a cryptosystem such as the one shown below:

What would happen if you were to send 1 BTC to Alice and yourself? The PoW consensus would in Bitcoin protocol will theoretically allow you obtain six confirmations before Alice. If this were to occur, Alice will not receive 1 BTC if she did not wait for at least 6 confirmations. However, you will have managed to send 1 BTC to your own account.

This is a classic scenario that is likely to take place if one miner or group of miners control more than 51% of hashpower. The 51% attack has the potential to dwarf and spell doom for the network.

3. Software problems

Traditional Blockchains have three main issues:

Usability : Whereas most Blockchains introduce some executable entities in the form of chain code or smart contracts, technologies and languages do not allow any creation and deployment of feature-rich apps.

: Whereas most Blockchains introduce some executable entities in the form of chain code or smart contracts, technologies and languages do not allow any creation and deployment of feature-rich apps. Security : Most conventional Blockchains are only built with a compiler which helps in the implementation of smart contracts with no regard to security. Consequently, security concerns such as access controls, transaction cloning, account hacking, and data retrieval and storage emerge.

: Most conventional Blockchains are only built with a compiler which helps in the implementation of smart contracts with no regard to security. Consequently, security concerns such as access controls, transaction cloning, account hacking, and data retrieval and storage emerge. Storage capacities: Traditional Blockchains have had challenges of storing large files such as medical records. To tackle this issue, many organisations are continuing to use different technologies like IPFS (Inter-Planetary File System) which is tedious to integrate into the Blockchains.

How does Nerves’ Platform resolve these challenges?

Nerves’ Platform promises to solve the aforementioned challenges and create an ecosystem where the core tenets of Blockchain thrives. Nerves Platform is a unique kind of Blockchain conceived with IoT devices in mind. The Platform will support self-privacy while ensuring scalability for other systems as well as providing a core network for other chains.

Here are the principles of Nerves based on its operation mode:

Task specialisation : Nerves Blockchain aims to connect various networks into a single Blockchain. Whereas other Blockchains cannot integrate all systems due to privacy and transparency concerns, Nerves Platform has been conceived to integrate all existing platforms. Integration of existing Blockchains into a single platform can decrease the transaction speed and computation power. However, in the case of Nerves, the platform will leverage “Task specialisation” where each node interacts independently with other chains without privacy and transparency concerns to enhance speed and limit computing power.

: Nerves Blockchain aims to connect various networks into a single Blockchain. Whereas other Blockchains cannot integrate all systems due to privacy and transparency concerns, Nerves Platform has been conceived to integrate all existing platforms. Integration of existing Blockchains into a single platform can decrease the transaction speed and computation power. However, in the case of Nerves, the platform will leverage “Task specialisation” where each node interacts independently with other chains without privacy and transparency concerns to enhance speed and limit computing power. Distinct Identity : Nerves Blockchain makes sure that each Blockchain in the ecosystem has its own functionality and application. For instance, if node A requires privacy, then it will be different node B whose primary objective is a faster transaction.

: Nerves Blockchain makes sure that each Blockchain in the ecosystem has its own functionality and application. For instance, if node A requires privacy, then it will be different node B whose primary objective is a faster transaction. Friendly: To achieve effective communication, scalability and performance, Nerves Platform will require the nodes to work without resulting in a system failure. As such, the Platform will be lightweight and be able to conserve resources like storage and computation.

Architecture of Nerves

Nerves will be implemented based on a trust-inclined or trust-based multidimensional Blockchain technology that links multiple internet services into one platform. At the outset, Nerves will have two primary chains:

a. Central/Stem Chain: The primary aim of the central chain will be to optimise the network’s performance with regard to transaction speeds and computing power.

b. Peripheral/Branch chain: It forms a communication channel for nodes. It will also function as a DApp. It will be conceived in a manner that it can create its own agreed governance structures depending on the consensus algorithm. It will have four different types of branch chains:

Immunity chain which does not use the native coin but will be used in used in the Nerves platform without eliminating them from the Branch chains;

which does not use the native coin but will be used in used in the Nerves platform without eliminating them from the Branch chains; Mutable chain : It will use the native coin at intervals;

: It will use the native coin at intervals; Instant chain : It is created by users and just like Immunity chain, it will make use of the Nerves native currency.

: It is created by users and just like Immunity chain, it will make use of the Nerves native currency. Private/Test chain: It will be used for testing purposes.

Conclusion

The success of transaction and contracts as underlying structures in a trustless economy requires a Blockchain Platform that can handle the current network, governance and software challenges. Nerves Blockchain Platform is primed to be the future of a trustless economy that promotes the core philosophies of Blockchain’s decentralisation, security and scalability.