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Are Altcoins Getting Too Complex? Solana, Arbitrum Experience Outages

The Sun has gone down. No, not that Sun, but rather Solana, one of the centers of the ever-expanding Solar System of altcoins.

It went offline yesterday (September 15), with block production freezing for several hours, before it emerged that excessive transaction requests actually caused the network to fork. What’s interesting about this episode is that it occurred around the same time that popular layer-two scaling solution Arbitrum also went down, with Arbitrum’s team later explaining that problems with its sequencer prevented transactions from being processed.

These two outages underline the technical difficulties involved in making blockchains do more than record the transactions of a native cryptocurrency. Given that they follow the emergence of other problems concerning Ethereum and Cardano (the two biggest altcoins by market cap), they raise an important question: are many altcoins too ambitious, too complex and too untested for their own good? Moreover, are traders better off sticking with Bitcoin, which has not only never gone down (or so its proponents claim), but is arguably the only platform to enjoy significant adoption outside of the cryptocurrency sector?

Solana and Arbitrum both went dark this week.

Solana and Arbitrum Go Down

Another interesting aspect of Solana’s technical troubles yesterday is that the platform’s native token, SOL, has been one of the best-performing coins of the past month. Having been priced at only $60 some 30 days ago, it has since shot up by 200%, to $160. In fact, at one point SOL rose as high as $213, representing a 250% rise over the previous month, as well as a massive 7,100% rise over the past year.

Basically, Solana has attracted plenty of hype over its claims that it could support “710k transactions per second,” a capacity enabled by its novel proof-of-history consensus mechanism (which cryptographically verifies a passage of time between two blockchain events). Such claims have gained it a status as a potential ‘Ethereum killer,’ seeing as it promises to offer much greater scalability.

Yet the funny thing is, despite its promises of greater scalability, a high volume of transactions appeared to take it offline yesterday.

In particular, its mainnet (which is currently in beta) encountered a substantial increase in transactions, reaching a peak of 400,000 TPS. According to Solana’s Status Twitter account, the absence of prioritization of network-critical messaging meant that this huge throughput quickly became a problem, so much so that the network began forking. In turn, this forking resulted in a big jump in memory consumption, with some nodes going offline, resulting in the freeze in production of new blocks.

Source: Twitter

Incredibly, Solana’s community of validators decided to solve this problem by simply restarting the network, some seventeen hours after the problem was first reported by Solana Status. That’s right, they hit the Reset button.

If nothing else, this event highlights the difficulty of making high-throughput blockchains such as Solana work properly and seamlessly. So too did the contemporaneous problems affecting Arbitrum, which is an Ethereum-interoperable scaling solution specifically for smart contracts.

According to Arbitrum, it experienced a problem with its Sequencer, which queues messages. Unlike the Solana issue, this technical hitch lasted for just under an hour. Nonetheless, the protocol was out of action (it wasn’t producing new blocks), so it once again underlines the complexity involved in getting blockchains scaling.

Is Conservative Bitcoin Safer Than Ambitious Altcoins?

Needless to say, people in the Bitcoin community were quick to make light of Solana and Arbitrum’s problems, with many using the opportunity to highlight how the original cryptocurrency has “never been down.”

Source: Twitter

Bitcoin maximalists may also be inclined to point out that other major altcoins have suffered their own technical problems in recent weeks. This includes Cardano and Ethereum, the two biggest by market cap.

In Cardano’s case, it was revealed earlier this month that decentralized apps had a problem with concurrency, which involves processing multiple transactions at the same time. It seemed that, during initial public tests, dapps could process only one transaction at a time, something which would severely limit their usefulness for DeFi and other purposes.

Input Output Hong Kong (which oversees Cardano’s development) responded to this discovery by explaining that Cardano is an unspent transaction output (UTxO) blockchain, in contrast to, say, Ethereum (which is account-based). This means developers using it have to do things a little differently, designing their apps with multiple UTxOs, so that they can “enforce more parallelism” in transactions.

Despite this apparent explanation, Cardano is ultimately still working on a permanent solution to this issue (involving “concurrent state machines”), so once again it shows that pitfalls involved in making a scalable, multi-purpose blockchain.

Ethereum fans may be tempted to gloat about Cardano’s difficulties, but Ethereum itself is no stranger to problems. At the end of August, its blockchain actually split in two, after the discovery of a bug that wasn’t patched by around 73% of the nodes running the old software version that contained it (or around 50% of nodes in total). It also seems that many of these nodes are still running the older, buggy software, with Etherscan showing a drop from just over 9,000 nodes on August 26 to only 3,000 today.

Source: Etherscan

With Ethereum losing around 6,000 nodes in a couple of weeks, its decentralization has been reduced. This impacts the health and robustness of its network, and it also once again highlights the perils of developing a sophisticated blockchain.

This brings us to Bitcoin, which despite — or perhaps because of — being simpler than most altcoins, has rarely encountered the kinds of problems outlined above. Unlike the likes of Solana, Cardano and other blockchains still very much under development (including Ethereum), Bitcoin remains more or less in its mature form. Sure, it does receive modest upgrades every now and again (e.g. SegWit, Taproot), but these never seek to alter its fundamental workings and architecture. These have been fixed for some time now, and the fact that Satoshi Nakamoto had these preconceived largely from day one is arguably a big factor in Bitcoin’s stability over time.

Hence, the nearly complete lack of Bitcoin outages and hacks. That said, while many BTC maximalists tend to claim that Bitcoin has never been down or never suffered a serious technical problem, this isn’t entirely true. As with Ethereum’s recent escapades, the Bitcoin blockchain split back in August 2010, after the discovery of a “overflow bug” that resulted in the creation of some 184 billion new bitcoins.

While these new bitcoins obviously no longer exist, their production highlights the fact that bitcoin was young and untested once. It also highlights the possibility that other cryptocurrencies will similarly emerge from their periods of early development as robust, sustainable networks.

That said, Bitcoin arguably remains the only cryptocurrency that has attracted significant mainstream use and adoption (as either a store of value or currency), with the likes of El Salvador, Tesla and various institutions all turning to it in one form or another. By contrast, most other platforms have gained traction almost solely within the confines of the cryptocurrency sector, with many remaining very much within an experimental, early testing phase.

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CryptoVantage Author Simon Chandler

About the Author

Simon Chandler

Simon Chandler is a journalist based in London. He writes about technology, markets and politics, and has bylines for Forbes, Digital Trends, CCN, Wired, TechCrunch, the Verge, the Sun, the New Internationalist, and TruthOut, among many others. His Twitter handle is @_simonchandler_

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