With the rise of cryptocurrencies and their continued adoption globally comes the problem of maintaining performance and scalability. CoinGeek.com’s Stephanie Tower engaged Dr. Michael Yuan, Chief Scientist at 5miles, in a conversation on cryptoeconomics.
Due to the computationally intensive requirements of networks like legacy Bitcoin, otherwise known as SegWit1X (BTC), user verification and transaction validation models based on proof-of-work have become untenable in terms of energy requirements. CoinGeek.com asked scientist and investor Dr. Michael Yuan about the barriers and challenges that face cryptocurrencies today.
“In terms of performance and scalability, there are very good solutions that are out there, which has been highlighted today. One of the leading solutions is dedicated proof-of-stake. So meaning in Bitcoin and Ethereum, you have to prove your trustworthiness to the network to work, by consuming electricity. And that has made the network and transactions very expensive,” said Yuan.
Recognizing the needs and complications that emerge from new spaces of innovation like cryptocurrencies and blockchain technologies, the 5miles chief scientist shared his thoughts on what’s next in the world of crypto.
“On proof-of-stake, you don’t have to prove your worthiness through your work, but prove your worthiness through the coins you hold and then by delegating the network maintenance to professionals, by having them hold to your coins as a bank,” Yuan said.
Citing BTC and the Ethereum network as examples of highly-congested networks, Yuan believes that one of the best solutions to the problem of congestion in cryptocurrency networks is dedicated proof-of-stake, which is a method of verification that no longer requires vast amounts of electricity from the user’s end.
Instead of using a lot of energy for what is essentially the same process, proof-of-stake is an algorithm with which a cryptocurrency blockchain network can achieve distributed consensus.
“This whole set-up is what we call crypto-economics, or cryptocurrency economics.” Yuan said. His research work with Dallas-based startup 5miles has led to the introduction of CyberMiles, a blockchain protocol that promises to revolutionize commerce and marketplaces.
Asked about what his thoughts are on addressing the scalability issues, Yuan shares his advice to the crypto community: “In my opinion, Bitcoin has you off from its original roots. So if you look at Bitcoin, originally it’s a currency, but because of the scalability, the transaction per second is slow, and because the price goes up so much, no one is actually using it as a currency.”
Yuan shared his company’s vision for merging cryptocurrency and blockchain with digital platforms for businesses, saying, “I’m optimistic about new fundamental blockchains emerging in the next couple of years. Because these new blockchains are going to be a lot faster.”
Of late, the scalability issues that posed a risk for the BTC network have already been addressed with a hard fork after years of intense debate in the crypto community. The debate centered on the issue of scalability, with Bitcoin Cash leading the community to the sensible conclusion of bigger blocks.