Blockchain is gaining traction worldwide as a stable and innovative technology that businesses can build platforms and applications on to improve various systems in different industries due the numerous conferences, video series and other educational platforms that create awareness. Of course, this also means that blockchain technology has been upgraded to handle huge amounts of data and low-cost microtransactions.
However, many are making it a popularity contest without a sustainable and stable blockchain technology to back it up. This is the case with Ethereum. As it rose to popularity due to its many users and networking efforts, businesses think it is also has a viable blockchain and are building their applications on it. They could not be more wrong.
A recent episode of CoinGeek Conversations hosted by Charles Miller touches on this subject as founder and CEO of the Norway-based enterprise blockchain platform UNISOT Stephan Nilsson provides co-founder and CEO of UK-based online jewelry platform MarketOrders Sukhi Jutla with industry know-how. While Nilsson has successfully launched his company's blockchain-based seafood supply chain, Jutla is looking to improve her own by using blockchain technology to make the jewelry supply chain transparent and bring down the high transaction costs brought about by the many third parties involved in the process.
"I think that there is going to be a lot of people maybe thinking about how you could utilize these digital chips to basically replace the paper certificates, as well as using blockchain, for the chip to talk back to the blockchain to verify its provenance and where it is in the supply chain. Maybe it could be used also as a digital certificate so that you can actually see exactly what's the components of this particular piece. And with the chips being in metal jewelry like gold or silver, if at any point in time that particular item is melted down into scrap metal, then that would actually talk back to the blockchain say it's like destroyed or there's no more information being encoded into it, so you know that this piece no longer exists," Jutla shares.
On top of tracking high-value products, Jutla is also planning to create a tokenized payment system to minimize delays in sending payments. This blockchain-based jewelry supply chain platform is truly innovative if it is developed properly. Jutla says she is eyeing Ethereum to build it on, but Nilsson strongly advises against it based on his firsthand experience when he was just like Jutla who was looking for a blockchain to build his seafood supply chain.
"There is a huge community in Ethereum, there are a lot of solutions out there. But none of them are in production. No one has actually been able to actually run this in production using all the functionality of the Ethereum blockchain because it's simply not scaling. You can do like 10-15 transactions per second, and it doesn't work for one company even. So the problem in Ethereum is that every company that is using it now is building second and third tier solutions on top of that to try to mitigate that it doesn't scale. They have a blockchain somewhere down there, but they're actually building a solution up here solving all their problems," Nilsson explains.
And this is why it is not practical to build on the Ethereum blockchain. It cannot scale to accommodate low-cost microtransactions, which leads to numerous technical problems, as well as high transaction fees.
