PayPal has once again shown an interest in the cryptocurrency world by dipping its hands into the goldmine. Last week they filed a patent for a new system that would transfer private keys outside of the blockchain in order to speed up transaction times. This is not the first time a solution like this, that is, off-chain solutions, have been suggested. Earlier, Microsoft suggested this could be a likely solution to the transaction speed dilemma currently plaguing Bitcoin.
In the patent being filed, PayPal states, “virtual currencies like Bitcoin have revolutionized money transfer and payment technology by allowing for inexpensive peer-to-peer transfer of value between users.”
The only problem with this technology as it stands is that as due to the ineffective scalability of it, the more mainstream it goes, the slower and more expensive transactions become due to an unprocessed backlog. Each transaction needs to be confirmed through a process could mining which inherently introduces a time delay or latency period. This delay is from the initialization of the transaction to the point on which it is added to the blockchain after being confirmed and thus resulting in a backlog as more transactions are added before all existing ones are being confirmed.
This time delay results in Bitcoin processing an estimated 10 transactions per second compared with those on major credit card networks which number around 50,000.
This solution is not the only one currently being worked on as of today. Within the crypto world many companies are attempting to create their own blockchain which solves the scalability issue which in turn will keep fees and processing times low as the network grows. The most well-known solution is the ‘Lightning Network’ which is focusing improving the existing Bitcoin network and has been boasted of being capable of processing billions of transactions per second by its developers. If one of these solutions should succeed then, this could be the stepping stone for moving cryptocurrencies to mainstream use. When this happens, the sky is the limit.
Mappo has been investing and trading in fiat currencies since 2013. He has recently moved into the crypto world spreading his portfolio over long term coin investments, ICOs and day trading.