Blockchains, as we know them today, were first built and launched for public use in 2008 when Satoshi Nakamoto introduced the Bitcoin network to power their revolutionary idea of a digital currency. However, it quickly became evident that this technology’s potential extended far beyond finance.
The consensus is that over 1000 blockchains are in active operation globally today. These networks are tailored to solve problems in almost every vocation known to man—from supply chains to voting systems and even digital art; the tech’s applications are as varied as they are promising.
The rate at which blockchains are being created is fairly stable. So far, in 2024, we have just one popular new blockchain: Consensys’s Linea. There are definitely many developers already ideating and building new blockchains for different legitimate reasons, but at this time, we need to ask ourselves: do we really need more blockchains?
Untapped potential in existing blockchains
Blockchain tech was fully divested from its digital currency application in 2014, and the advent of what is often referred to as Blockchain 2.0. This era saw the emergence of platforms like Ethereum, which extended blockchain’s capabilities beyond simple transactions. It launched in 2015 and was the first platform to build on Bitcoin’s foundational success by introducing smart contracts—automated programs that execute tasks without intermediaries. This innovation unlocked new opportunities, particularly in decentralized finance (DeFi) which Bitcoin introduced but was restricted and unable to fully power.
Following Ethereum’s success, other blockchains such as Solana, Polkadot, Avalanche, and Cardano entered the scene, each addressing specific challenges like scalability, speed, or energy efficiency. However, even these advanced platforms remain far from realizing their full potential.
Ethereum, for instance, has become the backbone of DeFi and NFTs, yet it struggles with scalability. High transaction fees and network congestion continue to plague the platform, despite ongoing upgrades like “The Merge” and plans for sharding.
Similarly, newer blockchains designed to solve Ethereum’s limitations—such as Solana’s high-speed architecture or Avalanche’s subnet functionality—are also facing challenges. Adoption rates are inconsistent, and many dApps struggle to gain traction outside niche markets.
However, one might argue that these blockchains are not particularly underutilized but that the market has not fully embraced the need for such scalable solutions. Blockchain adoption is still in its early stages across many industries, and the demand for such networks may not justify their full-scale use just yet.
Even beyond finance, blockchain adoption in industries like supply chain management, healthcare, and digital identity has been slow. While the technology’s potential is clear—improving transparency, reducing fraud, and streamlining processes—its application remains limited. This is largely because blockchain technology is ahead of its time in many respects, with infrastructure development outpacing market demand and real-world use cases.
In essence, the issue isn’t really a lack of blockchain platforms but rather a lack of widespread adoption and full utilization of existing ones.
The problem of fragmentation
Over 1000 blockchains, of which most of which are based in the financial sector, also suffer another problem: interoperability. Most blockchains operate in silos, unable to communicate seamlessly with one another. This lack of interoperability limits their utility and stifles the development of applications that could work across multiple chains.
Imagine a world where each country’s internet operated independently, with no way to share data or access global websites. That’s essentially the state of blockchain today. Developers building cross-chain applications must navigate technical complexities, such as differing consensus mechanisms, programming languages, and security protocols. This increases costs, slows innovation, and hinders user adoption.
Efforts to solve this issue are underway. Projects like Polkadot and Cosmos are leading the charge with interoperability solutions. Polkadot’s Relay Chain allows different blockchains to exchange data, while Cosmos’s Inter-Blockchain Communication (IBC) protocol facilitates seamless interaction between chains. Chainlink, another key player, ensures secure communication between blockchains and external data sources, which is particularly vital for DeFi applications. However, these solutions are not yet universally adopted, and fragmentation remains a barrier to blockchain’s widespread acceptance.
Making a case for fewer blockchains would rest on the argument that consolidating networks could increase efficiency and faster innovation. Simplifying the blockchain ecosystem would reduce the complexities involved in developing cross-chain applications, allowing developers to focus on creating more innovative solutions rather than dealing with integration issues. As the blockchain industry matures, the demand for effective interoperability solutions will likely drive consolidation and the adoption of universal standards.
Scaling existing blockchains
This is another side of the discussion. There are so many solutions out focused on improving the blockchains we already have and solving the problems we have discussed above. For example, Ethereum has made significant progress with Layer 2 solutions like Optimism, Arbitrum, and zk-rollups. These technologies process transactions off-chain, reducing congestion and lowering fees while maintaining the security of the Ethereum mainnet.
Other blockchains are also innovating. Avalanche introduced subnets, allowing developers to create custom blockchain networks within its ecosystem. These subnets can operate independently while still benefiting from Avalanche’s security and speed. Solana, known for its high throughput, continues to refine its proof-of-history consensus mechanism to improve scalability.
Interoperability-focused projects like Polkadot and Cosmos further enhance the utility of existing blockchains by enabling them to share resources and data seamlessly. This interconnected approach reduces the need for new blockchains, allowing developers to focus on building robust applications rather than reinventing the wheel.
Scaling solutions not only optimize blockchain performance but also create a more cohesive ecosystem. Developers can focus on building innovative applications rather than grappling with the complexities of integrating multiple blockchains. This unified approach can also improve user experiences, making blockchain technology more accessible and practical.
So, when is a new blockchain justified?
Despite the advantages of improving existing blockchains, there are situations where creating a new blockchain is justified. Innovation often drives the development of new networks, particularly when current infrastructure fails to meet specific needs.
Take the logistics sector as an example. Fr8, a blockchain-powered freight company, has revolutionized supply chain management by using smart contracts to increase transparency and accountability. Traditional logistics systems are prone to errors and inefficiencies, but Fr8’s blockchain-based approach ensures all parties have real-time access to accurate information, reducing disputes and improving efficiency.
Similarly, World (formerly Worldcoin) is tackling the challenge of digital identity. By leveraging blockchain, the project aims to create a sovereign digital identity system that is secure, verifiable, and accessible to all. This addresses a critical need in today’s digital landscape, where identity fraud and data breaches are rampant.
READ MORE: Lessons in Privacy from the Controversial Worldcoin Project
In some cases, innovation requires rethinking fundamental blockchain principles. Solana and Cardano, for instance, introduced new consensus mechanisms and architectural designs to address Ethereum’s scalability issues. These blockchains didn’t merely replicate Ethereum—they reimagined it.
While new blockchains can bring groundbreaking solutions, they should serve a clear purpose, addressing unmet needs or advancing the technology in ways existing networks cannot.
Striking a balance between innovation and efficiency
The blockchain ecosystem is at a crossroads where the pursuit of innovation must be balanced with the need for efficiency. On one hand, experimentation has driven the industry’s rapid evolution, giving rise to transformative innovations like DeFi, NFTs, and Layer 2 scaling solutions. On the other hand, the growing number of blockchains has created inefficiencies and complexities that hinder widespread adoption.
Consolidation offers a path to efficiency. By reducing fragmentation and promoting interoperability, the blockchain ecosystem could deliver more consistent and user-friendly experiences.
At the same time, continued experimentation remains essential for uncovering new possibilities. Without it, the industry risks stagnation, missing opportunities to redefine sectors like finance, governance, and healthcare. The challenge lies in striking a balance: fostering creativity while ensuring interoperability and collaboration.
One promising approach is the development of universal protocols and standards. Just as the internet relies on standard protocols like HTTP and TCP/IP, blockchain could benefit from shared frameworks that enable seamless interaction between networks. These standards would reduce fragmentation, improve scalability, and create a more cohesive ecosystem.
Final thoughts
Do we need more blockchains? The answer lies in the purpose they serve. While new blockchains can drive innovation and address unique challenges, the current focus should be on scaling existing networks and improving interoperability.
The blockchain industry must prioritize collaboration, building an ecosystem where technologies work together to maximize their collective potential. Whether through consolidation or continued experimentation, the ultimate goal is clear: to unlock blockchain’s transformative capabilities and make them accessible to all.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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