Blockchain Tradeoffs and Challenges for Current and Emerging Applications: Generalization, Fragmentation, Sidechains, and Scalability

Current blockchains often are designed with one use case in mind, such as currency transfer in Bitcoin or record storage in Namecoin. While application-specific blockchains are powerful tools for fulfilling their niche use cases, there are blockchains like Ethereum that have a set of use cases comprising a superset of the use cases of many blockchains. These generalized blockchains are powerful tools for extending decentralization to new use cases without designing entirely new blockchains. This paper considers tradeoffs in the design and implementation of blockchain systems that intend to deliver general functionality and examines various current and Merged-mining, fragmentation, the network effect, scalability, and generalized blockchain approaches are all considered and put into context. Bitcoin, Ethereum, Cardano, and Rootstock are considered in various aspects of the current limitations, and potential future solutions to problems noted. This paper weighs the chances of success of various generalized blockchain paradigms, including the network effect scalability and potential client-side use. We conclude that the network effect likely favors a Bitcoin/sidechain solution while scalability favors a direct Ethereum solution. The likelihood of success of mainstream adoption of any single decentralized application appears to favor an Ethereum solution.