Choosing a Blockchain

Choosing a Blockchain:

Factors that intersect while choosing a blockchain are the following: -

??Volume

??Security

??Scalability and Transaction cost

No classification is perfect. In a category where security and scalability are intertwined, blockchains with security issues are difficult to scale. However, to be able to analyze different aspects of blockchain separately, we will first consider all security-related factors. Blockchain evaluations then focus on scalability without considering security.

Volume:

Volume data is quantitative, but some of the other factors are qualitative. Therefore, we use volume data to filter the blockchains and focus on the top ones. NFT volume is based on NFT trading volume provided by Stacks on Chain and STX closing price provided by Binance.

Security:

Security is an important concept when it comes to choosing a blockchain, it is influenced by its consensus mechanism. Stacks blockchain provides the highest security.

Stacks:

Stack enables Bitcoin smart contracts. Stacks Blockchain uses a unique consensus mechanism called Proof of Transfer (PoX). PoX allows new blockchains to be created using the proof of work of an existing blockchain (anchor) that has different rules than the PoW blockchain. This provides anchor security (Bitcoin for stacks) without the need to change the anchor blockchain. Stacks can take advantage of the security and decentralization layers provided by Bitcoin Proof of Work. Proof of work is a consensus mechanism in which miners compete to solve mathematical problems. Whoever solves the problem first can update the blockchain with the latest transactions and get Ethereum.

In the PoW mechanism, 51% of computing power and nodes must fall into the hands of hackers or crooks to take over the system, but to do so, the hardware and run it must pay for electricity.51% attack probability close to zero.

Ethereum:

Ethereum uses a Proof of Work (PoW) mechanism, but Ethereum 2.0 will move to a Proof of Stake (PoS) mechanism. Validators can stake cryptocurrencies and validate transactions based on the amount staked. To become a validator on Ethereum, you currently need to deposit 32 ETH. If someone controls 51% of the nodes, it can affect the system, but given the Ethereum blockchain size, the investment required is very high, making this kind of attack unlikely. Become. PoS has a lower barrier to entry than PoW and almost no ongoing costs associated with it. This makes it less secure compared to Bitcoin.

Solana:

Solana uses Proof of History (PoH). PoH evolved from PoS. It cryptographically determines the elapsed time between two events and then assigns a timestamp to each transaction so that orders can be traced. This mechanism was first used by his Solana and has not been extensively tested and may present potential security risks. For example, in September 2021, December, and January 2022, Solana suffered distributed denial of service (DDoS) attacks that impacted performance.

The Solano blockchain has been temporarily and comprehensively down. As of 2022, a total of 11 outages have been recorded, including two major outages.

Scalability and Transaction Cost:

Scalability in a blockchain refers to how many transactions a blockchain can process in a certain time frame. Transaction costs (gas fee) in a blockchain refer to how much fee should be paid to the blockchain to make a transaction. Solana is the most scalable one and has the lowest amount of fees.

Solana:

Solana was designed with scalability in mind. His transactions per second on Solana are relatively high compared to other blockchains. It typically handles over 2000 transactions per second and can theoretically handle over 750,000 transactions per second.

Solana's transaction cost is very low compared to other blockchains (around $0.00025 per transaction) due to its large block size and fast block creation time. This means blocks can be created faster (every 400 ms), allowing more transactions to fit into each block.

Stacks:

Stack improves bitcoin block processing time with microblocks that speed up transactions, reducing the 10 minutes it takes on the bitcoin blockchain to just a few seconds.

Stack brings smart contracts and programmability to Bitcoin. Stack can theoretically handle 1.67 million simple transfer operations per day, and the Stack blockchain add-on layer helps scale that even further. Transaction costs on the Stacks blockchain are significantly lower than those of Bitcoin and Ethereum, but higher than those of Solana. Stacks Blockchain had an average daily transaction cost of about $0.05 in May 2022.

Ethereum:

One of the main limitations of the Ethereum blockchain is its scalability. Your Ethereum-based application has too many users and the volume of transactions exceeds what it can handle efficiently. Ethereum can manage 13-15 transactions per second and up to 1.1 million transactions per day, with over 1 million Ethereum transactions occurring daily. This created a capacity bottleneck.

Gas Units (Limit) * (Base Fee + Tip)

Gas Units (Limit) is the amount the user is willing to perform the transaction. Maximum amount of gas to pay. The complexity of the transaction determines the unit requirement. This is the minimum amount of gas required to add a transaction to the Ethereum blockchain. The base price is set by the Ethereum network and changes according to demand. The base fee will be burned after the transaction. Tips:

Tips are paid to miners. Miners prioritize high-tip transactions. High demand for transactions will increase gas prices due to higher base rates, and users will be able to pay higher tips to prioritize their transactions, resulting in higher overall transaction fees. For example, when Time Magazine sold his NFT collection, investors paid more in gas bills than his NFTs were worth.