VISA processes around 2.000 transactions per second (tps). Its peak capacity is 56.000 transactions per second. Bitcoin, on the other hand, can only handle 7 tps. Ethereum, the second-biggest cryptocurrency, reaches 15 transactions per second. Cryptocurrencies are slow, and they consume more energy than countries like Ecuador or Bolivia.
This is due to the way a blockchain reaches consensus: in order to prove the integrity of a transaction, the nodes in the network compete in a race for solving a mathematical problem. This is called proof of work (PoW). You hook up your computer to the network and power-grid, start the mining software and off you go: each second, your computer tries hundreds or thousands of possible combinations to find the right solution to a mathematical problem and thereby verifying the latest transactions on the network. Once one of the nodes has found a valid solution, all the computers on the network go on to the next task. They do this over and over again.
This obviously has some major downsides. Not only the number of transactions per second is limited; also storage is a problem since every node needs to have a full copy of the whole blockchain, while the blockchain itself is growing exponentially. This is bloating up the system and making it even more impractical for daily real-life use. With Universa there is a new blockchain coming that promises to solve these problems.
Universa is a new blockchain that promises to process up to 20.000 tps. This is being achieved by a combination of four main characteristics:
The result is a blockchain that will allow us to create and execute smart contracts at speeds 1000 times faster and 100 times cheaper than Bitcoin transactions. But there is more to Universa than just that.
Storing the transaction records outside of the blockchain has another big advantage: the size of a smart contract is no more critical to the resources of the whole system. With Universa we can store one or multiple documents inside of the ledger.
Imagine you want to sell your house. You would create a smart contract with all the documents necessary to prove ownership. Upon execution of the smart contract, the following (very oversimplified) steps would be triggered:
* Send title of ownership and the signed contract to buyer
* If buyer signs contract
then release 200.000,- € in Bitcoin to seller address;
Deal done. You got your money, the buyer got the ownership, and the whole contract including documents is stored in the blockchain until the state of the result changes again. This would, of course, require the now new owner of the documents to agree to the conditions imposed by a new smart contract.
Now, if all nodes on the Universa blockchain are “trusted partners” as the whitepaper states: how can the service then be decentralized? In the Telegram group, the CEO Alexander Borodich gave the following answer: “The only requirement for node owners is hardware requirements and obtaining a license which requires formal KYC.” Universa is going to be “decentralized, but with proper KYC for node owners. Compare it with UBER driver’s contract with UBER. Keep the SLA and grow with us.” This sounds convincing. According to Borodich, the model is comparable to master nodes in NEM and it will not be difficult to become one of the trusted nodes in Universas’ network if you meet the hardware requirements and are fine with disclosing your identity. Since consensus in Universa is reached through proof of stake, you likely won’t need an expensive GPU mining rig as blockchains based on proof of work.
Currently, most ICOs issue ERC-20-tokens on the Ethereum blockchain. There are a couple of other projects that work on Waves, but Ethereum is still the most important blockchain used in new cryptocurrency projects. Universa might become an interesting alternative for future tokenized services or products. The crypto community is desperately looking for a fast, secure and scalable protocol and Universa promises to be just that. With its combination of a DAG, sidechains and the Universa Notary Cloud it is tackling some of the most urgent challenges of cryptocurrency to date: slow transactions, bloated chain size and high costs of transactions.
Crowdsale starts tonight, Oct 28.