You are going to be filthy rich if you understand what I’m going to explain to you now in this article.

A new trend is breaking down the barriers of technology and creating the first truly powerful blockchain solutions.

May I present to you… okay, okay, I know you know it doesn’t work like that.

There’s no secret sauce to becoming rich with Crypto. Sadly for us, in the extremely risky world of Crypto, predicting what the future looks like is the million-dollar question.

The truth? Nobody knows.

But if you’re capable of understanding the technology driving innovation, your chances of making it are suddenly much, much higher.

For that matter, my role here is to delve into the complex world and minds of the geniuses working in the blockchain industry and their technicalities to cut through the noise and hand to you, in an understandable, digested way what those changing the world around us are doing.

And when it comes to blockchain, many smart kids in the space are screaming one word from the top of their lungs.

The duality between making money or creating something useful

The biggest problem with Crypto innovation is that the innovation that really matters is much less attractive, from an economic perspective, than creating yet another stupid coin that, although it provides no value, can be easily used in Ponzi-like structures that pump up in price pretty quickly.

They are glorified get-rich-quick schemes… but for founders, not for investors.

Therefore, as founders and developers aren’t in Crypto for altruism but for making money, how can we incentivize founders to create useful stuff?

But before that, the first question is, where’s innovation really needed?

Why are we really here?

When Bitcoin was created back in 2009, it was conceived to simply allow people to transact with each other using this new concept of cryptocurrency.

It was — and to great extent still is — an application-specific blockchain; it only has one use which is to send money to each other.

A few years later, people realized that blockchains could also be used for other applications.

For that matter, Ethereum was conceived as a distributed computer, allowing any application to run on top of a blockchain. Thus, Ethereum became the first general-purpose blockchain.

In layman’s terms, a blockchain that could run code.

Unsurprisingly, this gave rise to a flourishing ecosystem of applications and signaled the beginning of many trends we know today, such as DeFi, or NFTs.

But if creating your own blockchain and cryptocurrency can be much more profitable, why deploy your app on top of Ethereum and not create your own?

It all comes down to security

Blockchain’s main selling point is security, as distributed systems have no single point of failure and are also very hard to hack thanks to the power of the majority.

Thus, the more distributed your network is, the more secure. This means that older blockchains like Bitcoin or Ethereum, by being much larger and distributed, are much more secure than newer ones.

Consequently, when deploying your application on top of Ethereum, your app becomes protected by Ethereum’s security.

On the other hand, if you create a new blockchain to run your application, that blockchain can be easily tampered with the proper amount of resources.

Therefore, deploying your app in a consecrated chain like Ethereum is a no-brainer.

However, the choice isn’t always that easy.

Going old also has its drawbacks

Deploying on Ethereum forces you to adapt to it, to its constraints. This means that, besides the fact that it’s not that scalable, there are certain rules that need to be followed.

The application needs to follow the rules of the distributed computer — for instance, you can’t run an iOS app on an Android phone — and other innovative approaches to consensus or data storage are also hard-capped.

These constraints, in some cases, force these projects to look elsewhere in another blockchain that fits better, or simply create their own, with the security trade-offs that entails.

We can see this with an example:

Blockchain gaming requires high performance for online gaming.

In other words, they need to run on blockchains with high performance. For Crypto-gaming projects, deploying on Ethereum forces them to “share” blockspace with thousands of other projects.

What this means is that all applications on Ethereum compete with one another to have their transactions validated by the blockchain, which in times of high demand pushes up fees and also increases validation times.

It’s not that they don’t want to benefit from Ethereum’s security, it’s just that they simply can’t.

Hence, we run into a conundrum: how can these applications benefit from Ethereum’s security while having the freedom and capacity to create projects with higher scalability requirements, and while still having an economic incentive to do so?

Look no further, as I have the answer for you.

The future of blockchain architecture

In the end, Bitcoin and Ethereum were right.

Keeping it simple is the way to go.

Albeit sacrificing speed and latency, the developers in both blockchains stayed committed to small block spaces. That is, the number of transactions fitting in each block is relatively small in comparison to other blockchains.

Naturally, this means that for a transaction to be inserted into a block for approval, the time it takes lengthens with demand, which is why they are the two slowest blockchains of them all.

But why take such a counterintuitive stance?

Easy. To stay decentralized.

Decentralization and performance aren’t friends

If you increase block space to be capable of validating more transactions per second, the physical computers required to run the network become much more complex and expensive to run, which in turn fosters centralization as only a few people/entities are capable of committing such resources.

Simply put, blockchains can’t be fast and distributed at the same time.

All the innovations that, over the years, came to Crypto bringing higher performance than Ethereum or Bitcoin, always did it at the expense of centralizing their blockchains, which defeats their purpose in the first place.

So, how can we create a blockchain architecture that is very decentralized and also very scalable?

The word you’ve been waiting for this whole article, modularity.

Blockchains are fairly simple in concept

It’s ironic if you think that one of the most complex technologies ever, the blockchain, actually does just a few things.

In fact, they only do one.

Blockchains order transactions and validate them through consensus.

That’s it. The process is simple in nature:

Also, as proven by Bitcoin and Ethereum, base layers must stay simple to stay decentralized. But nobody said base layers should perform these three actions at once.

Which begs the question, what happens if these actions are performed by different systems?

What happens is something almost magical.

Keep it simple, stupid

In simple terms, modularity is the process of separating consensus, DA, and execution into separate layers to allow the combined architecture to have high performance while staying decentralized.

In other words, by detaching these components, they are ‘free’ to grow without the constraints that the other two impose.

This, in my opinion, is the unequivocally-certain future of blockchains.

And what are the elements that form this futuristic architecture?

These are:

The magical secret?

In these architectures, while having no apparent security trade-offs as transactions are still settled in the base layer (they inherit its high security), and block space is extended by executing transactions outside the base layer (faster performance) all the while allowing base layers to stay very decentralized as the requirements to be a node are lightened by smaller storage requirements, you achieve… the ultimate blockchain architecture.

Examples of projects following this trend

Already, many researchers and developers have realized this is the future of Crypto, with examples like:

Note: The described examples aren’t, in any case, recommended investments by the writer. Both are fairly new projects with unclear tokenomics and funding, which completely prevent any possible investment evaluation at this stage of their development unless you’re a multi-billion venture capital, which I happen not to be. Never take my word as advice.