The Importance Of Blockchain Infrastructure
First, let's address the elephant in the room. This guy basically sums up my take:
How did we get here? Well, I think it's time for some blockchain introspection:
Over one thousand new crypto-assets, some via ICO, some via mining schemes, have entered the market in the last two years.
Gambling, computing, exchanges, wallets, media, advertising, margin trading. That's a lot of consumer and enterprise hype for a technology still finding its legs behind the scenes.
A house with no foundation
I'm 31 years old, so I can't flash back to the eighties when the majority of the civilian internet lived on university servers. But I do clearly remember a day in 1995, staying up past 4am to download the first Command and Conquer PC game. Back then, 28.8kb/s modem was the norm and phone calls to the land line were your worst enemy. If you've forgotten how brutal it was, try loading the modern BBC on a modem twice the speed I just described.
Whichever side you may be on when it comes to the Bitcoin vs. Bitcoin Cash vs. Ethereum debate, the truth of the matter is that for truly decentralized blockchains with real developer adoption, 15 transactions per second is already overloading the circuits. Consider that CryptoKitties, at its peak, slowed the entire Ethereum network to a crawl.
The truth is that this event exposed an inherent weakness and strength in the state of Blockchain technology as it stands today -- the capability to verify transactions in a decentralized way means, specifically, that certain redundancies must be met and re-met before a transaction can be called successful on a ledger. And the ledgers themselves are getting bigger and bigger. A full Bitcoin Node, the entirety of the ledger, is something around 200 gigs.
But here we are, building Bitcoin margin trading dapps on the equivalent of a 28kb/s modem
Building certain dapps on this infrastructure is like trying to play Call of Duty on an Apple III:
How did we get here?
Just weeks ago, you could throw a dartboard at a project and make enough in a week to rival a years' worth of growth on the NASDAQ.
Then came the regulators, the hackers and the haters. China, South Korea, Paul Krugman, the SEC, and many other groups have chimed in on coming regulations, bans and a lack of fundamentals -- causing enormous uncertainty.
Cryptocurrencies have lived through more product launches, hype, fake news, volatility, regulatory confusion and manufactured spin in 6 months than most assets live through in a decade.
Let's not miss the forest for the trees
There is a silver lining to the mass exodus of uneducated retail investors: amazing infrastructure projects float to the top of the conversation, fueled by developer communities that aren't subject to a 20%, 30% or even 75% drop in price. These projects will stand the test of time in all the metrics that matter, including price and volume. They will form the backbone of the future.
Below is a partial list of projects I am following that aim to address the infrastructure problem. (The list is meant to be directional.)
Bitcoin Layer-2. Capabilities that allow for off-chain transactions. Do a bunch of transactions off of the blockchain, but interact with it afterwards to ensure they are secure and verified. If A and B trade a lot between each other, let's just record the final amount instead of each individual transaction. This is already here for Bitcoin, and it will soon hit the major exchanges. Read more here.
MimbleWimble. An attempt at greatly reducing the size of full nodes by using some very fancy cryptography. The name and origin story might be silly, but the project is most certainly not.
Ethereum Sharding. The idea that transactions don't have to all be processed on a single database, but can be split up and verified in parallel. Read more here.
New(ish) Blockchains. IOTA, EOS, NEO, Waves and several others in various stages of development offer far greater speeds. But they don't have the same investor or developer adoption and many lack trustworthy, transparent teams.