NEM.io’s (XEM) Lon Wong discusses the limitations of P2P technology
Lon Wong, president of the NEM foundation, joins Crypto Finder to discuss the limitations currently facing P2P technology and how NEM's platform hopes to scale.
Interview from Blockchain Week London on 23 January 2018.
Read the transcript:
If you look at the competition, the landscape, the biggest challenge we have in the peer-to-peer technology is the ability for us to transact at a very high rate for the simple reason that when a transaction gets broadcast into one node, it has to be propagated into the entire peer-to-peer space for all the rest of the nodes to pick up that transaction and recognize that transaction.
And because of that, it is a technology limitation in terms of transactions per second. And in as far as what, how we have done it is that we basically fine-tune the ability for any node to accept a transaction and to propagate that and to be able to basically what we call ingest those transactions into the high-performing server and push that to the limit. And that's where we actually fine-tune that to achieve 4,000 transactions per second.
And we can't claim that we can do a hundred thousand transactions per second because of the limitations. It's a physical limitation of the network and the servers that does not allow us to do anything of any significance in the transaction. And also purely because it's decentralised.
And do you hope that that rate will continue to grow?
Oh yes, in fact, we have the 4,000 transactions per second has been recognized by an entity in Japan. I cannot remember exactly, but it's an entity that actually tested it and ascertained that it was 4,000 transactions per second. But internally, we have actually achieved much higher than that but that is not published, and we would want that to be accredited rather than to claim ourselves.
And would you say that you're solving a problem there that other people aren't solving?
Well, this is a very interesting question because, in reality, you do not really need 4,000 transactions per second. That's the reality of it. And a lot of financial institutions benchmarking it against a centralised solution where at its peak it is 10,000 transactions per second or maybe 20,000 transactions per second, and that's the Visa and Mastercard scenario. But in as far as a bank or a financial institution is concerned, the transaction rates very often fall below 1,000 transactions per second.
So this is where benchmarking it with something like Visa, which is global, is not quite true because of the fact that it is a global solution. But having said that again, there are ways for us to re-architect such things to even scale to beyond 20 thousand transactions per second and this is where we have actually looked at it and we could do such scalability when the time arrives.