Can Quarkchain handle the real world commerce transactions?

Can Quarkchain handle the real world commerce transactions and keep intact the basic principles of blockchain i.e. decentralization and security? - A technical analysis of the system architecture, starting from the basics

Blockchains like Bitcoin and Etherium are slowly getting mainstream for peer to peer transactions, but still they are in their nascent stage of becoming the go to choice for commerce. Being decentralized system due of its core principle the blockchain lags way behind conventional centralized players. Below image illustrates the current ecosystem.

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Lately, there have been lots of attention from the blockchain community to solve scalability issue and keep decentralization and security as a priority.

In a broader technical sense when we talk about scalability, there are two types of techniques that can be applied to an ecosystem i.e. Horizontal scaling and Vertical scaling. To understand these techniques lets just briefly understand in simple language:

Vertical Scaling: In this technique the resources available on servers are increased for example the available processing cores, RAM size etc.

Horizontal Scaling: In this technique, instead of increasing the resources of servers, number of servers are increased, thus the load on current ecosystem gets distributed among all the servers in the network and it increases the performance of the system exponentially.

Beside the technical potential of horizontal scaling, in the blockchain, we are not interested in vertical scaling as it gives more hash power to certain miners and thus is not healthy for the core purpose of blockchain existence.

So are there any horizontal techniques being currently used by blockchain projects? In my current understanding, there are currently two main solutions being explored or implemented i.e.

Lightning Network: The basic principle is to keep intermediate transactions between two parties off-chain and reflect transaction on the blockchain once they have final transaction. This architecture is a good solution, but lacks the transparency factor. Currently, this is being used in Bitcoin network.

Sharding: The term sharding architecture was coined for improving the reliability and speed of database CRUD (Create, Read, Update and Delete) operations. In simple terms the database is sliced into multiple partitions and distributed across the network. Thus, non related operations can be performed in parallel. There is a lot more to it, but this is more than sufficient to understand the concept of sharding. So, if we talk in terms of blockchain you can think about distributing transactions into different shards.

There are multiple projects that are building the blockchain utilizing sharding technique e.g. Zalliqa, EOS, Etherium etc. and now we have another promising project, i.e. Quarkchain that claims to target 100000+ TPS as a first goal. Lets understand the technical aspect of this project and analyze if this is even possible?

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Quarkchain is a high capacity peer-to-peer transaction system as stated in the project's white paper:

Design principles of Quarkchain that outlines the key goals:

1- Improve scalability while keeping the security and de-centralization aspects intact
2- Enable cross shard transaction for user quality of experience(QoE)
3- Simpler account management for clients
4- Open standard to enable development of DApps.
5- Incentive driven ecosystem

Software Architecture:
Being an technocrat, most of my interest lies in this piece of information. I must admit that I was quite skeptical about potential scaling capabilities of the system claimed by Quarkchain, but it has changed after understanding the system architecture:

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The system comprises two layers of blockchain i.e.

Root Chain Layer: The main responsibility of root chain is to confirm the transactions from shards layer and mine the desired block to reach Proof of work. 50% of hash power is allocated to this layer alone.

Elastic Sharding Layer: The responsibility of this layer is to maintain ledger and perform the transaction. This layer contains a list of minor blockchains i.e. shards and each shard by definition process the slice of all transactions independently. The beauty of this layer is that theoretically infinite number of transactions can be processed in parallel with increasing the number of shards. Also, as these shards are independent, thus increasing the shards can be done in realtime for improving the capability of network. Its like if you want transport more people from A to B in parallel, you just need to increase the number of Bus it is as simple as that.

Same as in the case of Database sharding, any transaction done within the shard is simple because all the required information resides within a shard and there is not need of cross shard synchronization for completing the transaction. Quarkchain claims to have efficient cross shard transaction system where transactions can be performed within a minute and the performance of cross shard transaction can be improved linearly by increasing the number of shards.

Everything looks great on paper but what about real product?

This is what bugs me a lot, in my experience almost every good technical person can have great ideas, but what matters is its execution. I am happy to learn that Quarkchain already have a simulation of the network with 18 -nodes and 8- shard. Following are the results for early stage incentive and difficulty algo testing:

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Also, not to forget that Quarkchain claims to have clocked 2.2k TPS on testnet.

I am a software engineer by core and I love to the keep my code modular and flexible. This architecture is designed in such a way that it is highly flexible and that is the beauty of highly adaptive coding for e.g.

a- Allocate 100% hash power to root chain and system is converted to conventional single blockchain

b- Revoke all hash power from root chain and system is converted to multiple independent blockchains.

Interesting No?

I guess the purpose of this article is accomplished, but there are still lots of details about the project that needs to be explored and shared. Maybe in next article!!! Stay tuned!!!

BTW, I will also play the devil's advocate and analyze the boundary conditions and exceptions that can cause the system to fail 😉

My current analysis says that this project has smart and simple tech, but remember folks simple is not easy!!!! Hopes are high as team and advisors seem to know their business….

Thanks for the nice write-up, @tushargupta. It is interesting to see Visa's TPS figure juxtaposed next to the top cryptocurrencies. Never would have guessed that the difference is so significant.

Looking at the chart and seeing XRP as the next best alternative at only 1500 TPS makes 100,000 seem like a distant dream. Do you think Quarkchain has reason to state their intentions of reaching 100,000+ TPS right off the bat, or is this figure a bit too far-fetched at the moment?

You called yourself a technocrat... do you have any development experience?

Hi @afridylan thanks for your nice words!

Yes, in terms of TPS, blockchain projects need to cover a long road before we think about replacing VISA and other conventional transaction systems.

On papers, the system has capabilities to scale the TPS and 100,000+ TPS can be achieved, but it all depends on the product development team if they can execute the plan and they do not find any big roadblock. I also need to do exception analysis which I plan to do soon and maybe I can find a loophole in the architecture.

I am a software professional with around 12 years of experience with some Fortune 300 companies in Healthcare and Banking/Finance domain. Also, build my healthtech startup that helps medical professional. I have recently started exploring blockchain to see if I can find a use case where I can utilize my expertise and build something viable 🙂

@tushargupta

That's awesome. There is a special group for developers here. Maybe @admin can add you to that.

It's funny how most projects--like Quarkchain--have a proposed solution that works in theory, but ultimately these outcomes are coming down to execution. Some will inevitably fail to carry out their promises, while others will surprise us and overdeliver. It sounds like you think Quarkchain has what it takes though?

@afridylan sure will love to be added in developer group and learn from the community.

I have high hopes from Quarkchain because of his Founder (Qi Zhou), he has great experience in building high performance systems for Google and Facebook. So, yeah fingers crossed.

@tushargupta said in Can Quarkchain handle the real world commerce transactions?:

@afridylan sure will love to be added in developer group and learn from the community.

I have high hopes from Quarkchain because of his Founder (Qi Zhou), he has great experience in building high performance systems for Google and Facebook. So, yeah fingers crossed.

Invite sent, welcome to the group 🙂

@admin thanks a lot! Joined the group and looking forward for some exciting knowledge exchange 🙂

@tushargupta said in Can Quarkchain handle the real world commerce transactions?:

@afridylan sure will love to be added in developer group and learn from the community.

I have high hopes from Quarkchain because of his Founder (Qi Zhou), he has great experience in building high performance systems for Google and Facebook. So, yeah fingers crossed.

A good leader and team behind the project is definitely an important factor. Speaking of which, how long have you been working on Buzz4health? Would be interested in hearing more about those efforts. Perhaps in a different thread? 🙂

@tushargupta

Also, have you heard of High Performance Blockchain (HPB)? They are working on a unique hardware/software solution to create a faster blockchain. I've read they are aiming for 1 million TPS and a 3-second confirmation time, mainly accomplished by breaking the hardware bottleneck.

@afridylan interesting and thanks for sharing. I will be surely reading this article. Hardware + Software solutions seems to be a great approach in solving the problem. Thanks again for sharing

@tushargupta said in Can Quarkchain handle the real world commerce transactions?:

@afridylan interesting and thanks for sharing. I will be surely reading this article. Hardware + Software solutions seems to be a great approach in solving the problem. Thanks again for sharing

I agree. Looking forward to further progress.

...and no problem. Thanks for prompting the discussion. 🙂

@tushargupta Thank you for your highly informative post.

Let's just pretend it is 2022 and Quarkchain has been able to deliver on all of its audacious promises: In what ways do you think this will impact traditional finance, cryptocurrency mass-adoption, and blockchain architecture in general? Can the banks and credit card companies scale up their TPS using existing technology if they wanted to, or are they also limited in some way?

I love the concept of Quarkchain; its viability in real-world situations will be a major disrupter in the mass payments processing space.

By the way, you're profile packs a heavy punch.

Welcome to the forum and looking forward to hearing from you!

@coin_raven thanks for your nice words and sorry for replying late.
To be honest, I don't know the answer, but I foresee lots of movement and path-breaking trends in the banking system because of Blockchain. Few examples from Indian banking system:
1- https://www.thehindubusinessline.com/money-and-banking/south-indian-bank-rides-the-blockchain-wave-to-complete-overseas-transactions/article9980528.ece

2- https://www.icicibank.com/aboutus/article.page?identifier=news-icici-bank-executes-indias-first-banking-transactions-on-blockchain-in-partnership-with-emirates-nbd-20161210162515562

3- https://www.edgeverve.com/blog/ready-indian-banks-blockchain-adoption/

4- https://www.businesstoday.in/sectors/banks/infosys-blockchain-banks-trade-network-india/story/277061.html

FYI, Infosys is one of the world's biggest software consultancy firm based out of India. Seems like banking system in India are eager to adapt private blockchain, especially after recent financial frauds in Indian banks. This in my opinion is the key driver for the banking system to adapt blockchain technology instead of revamping or scaling existing system.

A good toilet read article:
https://www.firstpost.com/business/punjab-national-bank-rs-11000-cr-fraud-why-banks-urgently-need-to-adopt-blockchain-technology-to-avoid-such-scams-4352435.html

Hi, @tushargupta, no worries at all... I appreciate the links.

Private or permissioned blockchains make a lot of sense for financial institutional use. I haven't been able to figure out how the question of immutability will be answered, even in permissioned/private blockchains.

One of the core attributes of blockchain technology is immutability, and we know how often banks have to invalidate, rescind, recall or plain out cancel transactions, and in the real world, they are going to be doing that a lot regardless of whether they run their core banking program on the blockchain or some other technology. In a blockchain, once a block has been written, it cannot realistically change.

What I am saying, in essence, is: since there is going to be lots of alterations to transaction data, what then is the advantage of blockchain technology when deployed in banking when they can just use a database or software with mutability?

I am not a developer, so I want to drink from the fountain of your knowledge [hope that doesn't sound corny].

For now--judging from the stuff you shared--it seems the banks want to deploy the blockchain as a sort of clearing system [think smart contracts]. There is no mention of whether they are looking to use blockchain technology in day to day transaction processing.

While I thought about it, a very limited use case came to mind: perhaps, for now, blockchain technology will be used for only high-value transactions that have been scrutinized and pored over for issues or errors which makes the likelihood of errors infinitesimal.

It's all very interesting to think about! Looking forward to your thoughts.

@tushargupta said in Can Quarkchain handle the real world commerce transactions?:

@coin_raven thanks for your nice words and sorry for replying late.
To be honest, I don't know the answer, but I foresee lots of movement and path-breaking trends in the banking system because of Blockchain. Few examples from Indian banking system:
1- https://www.thehindubusinessline.com/money-and-banking/south-indian-bank-rides-the-blockchain-wave-to-complete-overseas-transactions/article9980528.ece

2- https://www.icicibank.com/aboutus/article.page?identifier=news-icici-bank-executes-indias-first-banking-transactions-on-blockchain-in-partnership-with-emirates-nbd-20161210162515562

3- https://www.edgeverve.com/blog/ready-indian-banks-blockchain-adoption/

4- https://www.businesstoday.in/sectors/banks/infosys-blockchain-banks-trade-network-india/story/277061.html

FYI, Infosys is one of the world's biggest software consultancy firm based out of India. Seems like banking system in India are eager to adapt private blockchain, especially after recent financial frauds in Indian banks. This in my opinion is the key driver for the banking system to adapt blockchain technology instead of revamping or scaling existing system.

A good toilet read article:
https://www.firstpost.com/business/punjab-national-bank-rs-11000-cr-fraud-why-banks-urgently-need-to-adopt-blockchain-technology-to-avoid-such-scams-4352435.html

Are you in India right now, @tushargupta?

If so, have you noticed any changes as blockchain technology begins to become more common? What is the general sentiment among Indians towards blockchain technology adopting and implementing a blockchain approach versus some other type of revamp or scaling attempt?

Appreciate your time; blockchain's potential in these areas of the world is awfully interesting: https://blockchainforums.info/topic/245/cryptocurrency-in-third-world-countries

That's a really interesting post, and I'm looking forward to the follow up. I also like how you used transactions-per-second instead of average transaction time as a metric. This is a much better indicator of ability to scale.