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Dfinity

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Dfinity could be one of the first of many projects aiming to improve the already powerful Ethereum infrastructure. Since being invented, blockchain has been used to create virtual currencies, with the goal of wiping out financial institutions as the middleman. As businesses attempt to adopt blockchain into their business model in order to cut costs and increase efficiency, they need to be assured that the blockchain they adopt will be able to scale and meet all present and future business needs. Bitcoin’s technology is seen as the root of all blockchain applications, but it lacks the scalability to meet the fundamental requirements of all business. Ethereum can scale marginally better and its applications outside of a currency are limitless. This is where Dfinity comes to save the day. As business applications move from being traditional desktop applications to cloud solutions, the ability to scale becomes a tremendous task. Dfinity accomplishes this by redesigning the Ethereum network protocol to produce a network that can be scaled easier. Since Dfinity is primarily restructuring the Ethereum network, it is conceived as an extension of the Ethereum ecosystem.

For Dfinity to improve the Ethereum network they focused on three ideas: security, speed, and scale; otherwise known as Crypto:3. The core approach is counterintuitive as it revolves around random numbers. The network leverages the use of a top-level Threshold Relay chain that produces randomness and progresses with minimal “reorganizations” while resolving the “selfish mining” and “nothing at stake” problems. To make it easier for new miners to enter the network the chain records a single root hash that anchors all the data stored in the virtual computer, no matter how large it gets.

The key challenge that decentralized networks face is computing problems quickly. Current blockchain computations become final after a few minutes making it tougher for developers to reassure financial institutions that transactions will happen in a tamperproof fashion. By adopting the Threshold Relay chain, Dfinity allows transactions to occur faster without the loss of security.

Similar to Ethereum’s DAO, Dfinity introduces a decentralised decision-making system called the “Blockchain Nervous System” (BNS). This “superuser” will be able to solve problems otherwise intractable without human intermediaries. The BNS will accept proposals from users for a fee. The BNS, would then decide on proposals using votes made by users, “neutrons”. The BNS would learn to make better decisions as neutrons respond to different stimuli and feedback. The ability for the BNS to learn to only adopt proposals that are in user’s best interest will aid in enhancing the scalability of Dfinity. 

Since Dfinity is building a new chain that will be able to scale while still ensuring fast transaction times, the likelihood of businesses building on top of their chain is exceptionally high. The ability for miners to be able to mine within minutes of setting up hardware is enticing to a miner as they won’t have to download the whole chain. In addition, the Blockchain Nervous System will be highly regarded by business as they will be assured that significant changes to the chain will happen only when it has been determined to be in the best interest of the users. As a result, businesses will be able to build applications that store their data, make transactions and settle contracts knowing that Dfinity will be able to meet their requirements long into the future.

Dfinity is still building their network, with their beta network (Copper network) to be released towards the end of Q1 2018. The expectation is that the Copper network will launch at the end of Q2 2018. The initial Copper network will provide dramatic gains without implementing the crypto:3 scale-out systems scheduled to start appearing in later releases.

The Dfinity team will be able to deliver a project that meets the needs of business’ so they can run their software on the cloud. The team brings years of development experience and deep theoretical knowledge in various fields that will benefit while building the platform. Dfinity has a group of members from École Polytechnique Fédérale de Lausanne (EPFL) working full time on the project at any given moment. With their extensive knowledge in cryptography, Dfinity will be able to create a new standard for cryptocurrency. Dfinity is currently funded by String Labs, a Silicon Valley investor, incubator and studio focused on open protocol crypto projects. They held a private sale in 2017 raising an undisclosed amount of money. They are currently in the process of putting together the details for their public crowd sale.

Dfinity is one of those projects that if adopted will disrupt the crypto ecosystem. The technological advantages they will provide will aid them in becoming a crypto superpower. With recent network congestions due to increased transactions faster blocktimes will only be a temporary solution as the network continues to scale. Dfinity’s network will be able to scale from day one while continuing to provide a quick and secure platform for decentralized apps to build upon. Dfinity is a project that should be watched very closely in 2018 as it releases its network.

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Fintech Review

Fintech Review is a magazine focusing on the intersection of finance and technology in the modern age. We provide you with details and reviews of the latests fintech news, while analysing market trends and ventures so you don't have to. You will also find interviews wit hkey industry leaders and opinion pieces from those experienced in the game.

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