Interoperability, scalability are big challenges for blockchain: Chainalysis

Scalability and interoperability remain two of the biggest challenges facing the evolution of blockchain-based systems. That’s the view of Pratima Arora, chief product officer of Chainalysis, a company that is rapidly emerging as one of the analytics stars of the Web3 world.

Arora was responding to a question from Digital Nation about the cost of gas fees and a lack of understanding about such costs among corporates considering blockchain developments.

“The gas piece is a real issue on Ethereum and a lot of people don’t know about it. Ethereum has a big merge coming in 14 days, which is coming, which is going to [lower costs]. Some people say it's a myth [and] it's not going to bring the gas fees down. We'll see how much impact it does have.

She told Digital Nation the gas fees are a symptom of scalability, "There are lots of other symptoms of scalability issue, but high gas has been one of them.”

Interoperability between blockchains also remains a significant issue.  

"There are so many chains, and how do we make sure there's interoperability between all of them. Today doesn't exist," she said.

Re-architecture

Arora said the blockchain world is in a period of significant innovation. “Think about this as a wave of innovation right? But you're going back to Bitcoin, then Ethereum and now things like Solana and Tron who are getting so popular, we're seeing their volumes go up the roof, with the promise of new things. There are 1000s of currencies out there and they're bringing their own promises. Some are saying ‘we are security first’ some are offering a lower gas fees version.

Ethereum is currently undergoing a big architecture, moving from proof of work to proof of stake.

According to Kit Colbert, VMware CTO, “The thesis is that hopefully the amount of effort it takes to validate a transaction will go way down. That's the [source of the] cost and the environmental cost. Sustainability is a whole other issue."

It's an issue Vmware has addressed with its own blockchain. "For our private blockchain with the VMware blockchain, we do use proof of stake and it's very, very efficient compared to any of the public chains."

Andrew Birmingham is at VMworld in San Francisco as a guest of VMware.