Distributed ledgers are a groundbreaking technology which has garnered the attention of investors, technologists, and various industries. Bitcoin, the first and most renowned ledger, was introduced in 2009.
Bitcoin’s defining characteristics, including transparency, immutability, and trust established through economic rationality, proved adequate for creating the world’s first fully peer-to-peer electronic cash system. Additionally, it introduced the concept of a blockchain, which in Bitcoin serves as both a transaction record and a means to achieve distributed consensus through proof-of-work.
Bitcoin’s ability to instil trust without relying on a central authority made it relevant to industries that traditionally relied on trusted intermediaries. Furthermore, the transparency and immutability of the blockchain-enabled independent timestamping and auditing of data, provide a new tool for compliance and regulation.
While certain industries, like financial services, were susceptible to disruption, it became evident early on that the technology’s impact would extend far beyond that.
Consequently, businesses began exploring how distributed ledger technology could enhance their services. However, many businesses have subsequently encountered challenges related to costs, privacy, stability, and scalability. These concerns were particularly pertinent to large enterprises, which tend to be risk-averse and deal with significant volumes of data processing.
Research paper: Ledger comparative analysis
The complexity of the technology and the proliferation of new ledgers means that it can be difficult to identify the appropriate ledger for a particular use case.
To help address this issue, nChain, has published a new research paper, Ledger Comparative Analysis, which aims to simplify this task by developing a methodology to objectively analyse a ledger’s fundamental value.
nChain is a leading global provider of blockchain technology, IP licensing and consulting services. Its analysis covers:
Vision and values
This broadly covers the ambition of the ledger according to its community, thereby providing a reference to measure success.
Technical capabilities
This topic includes statistics such as transaction throughput per second, maximum script/ smart contract size, and maximum block size.
Blockchain transaction fees
This deals with the tokens currently in circulation. However, nChain focus is not only interested in the average fee per transaction but what can be obtained with this fee, e.g., a transaction of a certain size or smart contract execution.
Token distribution
This deals with initial token supply and distribution, current status and plans. It is not necessarily a focus on tokens that are not in circulation.
Security and resilience
nChain focused on how a network identifies a problem and what steps need to be taken to deal with it.
Blockchain governance
When it comes to distributed ledgers, decision-making can be a notoriously complex and opaque process. This analysis primarily focused on whether there is a single organisation that has a controlling stake in the governance model. This can manifest itself in nodes being managed by a central authority.
Based on their market capitalisation, historical significance, novel technology, and application scope, the ledgers considered by nChain include:
- The BSV blockchain;
- Bitcoin Cash;
- Bitcoin Core;
- Ethereum;
- Cardano;
- Algorand;
- Solana;
- Ripple;
- Stellar;
- Binance Chain;
- Hyperledger.
Blockchain commonalities and interesting findings
Based on its analysis of the above ledgers, nChain found the following commonalities and surprising features:
- The monetary supply of most ledgers is not fixed, and the monetary policy is not transparent.
- Many governing foundations still hold a significant share of their ledger’s tokens. And they are sometimes burned to control the price.
- For many ledgers nChain found there to be a big gap between claimed theoretical transaction throughput compared to actual observed throughput.
- Node software and its security are not often professionally reviewed.
- There is a tendency for newer ledgers to reduce block time while not necessarily achieving quicker finality.
- Most ledgers do not prioritise on-chain data storage, e.g. they restrict payload sizes.
- The researchers found it difficult to validate claims that businesses were actively building upon a given ledger.
The full research paper, Ledger Comparative Analysis, is available via Research Gate.
