Ethereum is often misinterpreted just as a cryptocurrency, however, it is much more than a simple cryptocurrency. It is an open-source platform that allows developers to build and deploy decentralized applications. On the other hand, its cryptocurrency, Ether, is used to support and empower the applications developed on the Ethereum blockchain. Ethereum allows computers to run without using any third party, on a network of many private computers, thus, decentralized. However, like other cryptocurrencies, Ethereum is also plagued with certain drawbacks, some of them are – congestion, and lack of scalability. Congestion occurs because all the transactions are pushed and verified on the main blockchain chain itself which in turn hampers the number of transactions per second.
Ethereum’s Plasma is one of the promising solutions to both the drawbacks aforementioned. It aims to scale the blockchain as well as reduce the congestion. It was proposed by Ethereum cofounder Viltalik Buterin and Joseph Poon in Aug 2017 as a scaling solution. It is estimated that in the initial versions of Plasma will increase the TPS (transactions per second) by more than one thousand. And in the later versions, it can be improved to million transactions per second. It is not the first time that Ethereum has come up with scaling solutions. Previously also, it deployed a scaling solution named state channel that aimed to reduce the congestion by off-loading the transaction to the child chains or side chains.
Plasma framework allows users to create ‘child’ blockchains that use the Ethereum main chain and are associated with it as root contracts. It also provides the flexibility to the operators of the side chains to decide on the complexity, consensus mechanism, block size, and confirmation time. The ultimate goal is to bring transactions to the side chains from the main channel if it does not require the transactions to be verified directly on the Ethereum main channel.
Often concerns are being raised regarding the security of Plasma. There lies the possibility that the side chain operators may be scammers and operating maliciously. In that case, if there is any conflict or malicious operations going on, users are provided with the option of moving the tokens back to the main channel. As already mentioned, the main Ethereum network and side chains are coupled together with root contracts that lay the rules guiding each side chain.
Root contacts ameliorate the trust of the users as it guarantees the token to its owners if it has never been redeemed. For example, if a user moves few crypto tokens to a side chain and can prove that the tokens have never been spent by him or her, then the right lies with the owner to withdraw the tokens from the side chain and use the same on the main Ethereum network.
However, there are certain limitations of Plasma which makes people skeptical about its deployment. The first one being the limitation in the withdrawal of the funds. It is proposed that it will take nearly one to two weeks in order to withdraw the fund from the side chains. This keeps the users at a disadvantage who have limited funds and wants the token withdrawal process to be responsive. Apart from this, there are many practical issues in this approach. It makes the users with the computationally intensive task of verifying the side chains continuously. Also, in the case of a security compromise, all the history would need to be posted on the main channel. This may lead to overloading of the blockchain network difficult to control.
It is quite unsure whether Ethereum has given up on Plasma or it still is in the race of deployment. It depends on how the firm deals with the limitations. But a scaling solution is a dire need for Ethereum, either Plasma or something else.