As an emerging technology, decentralized & distributed protocols have enjoyed tremendous scientific growth and development this year. We've seen an increase in utilization of cryptography in distributed systems for the creation of new or improvement of existing blockchain architectures. We've also seen remarkable improvement in the analysis of cryptoeconomic factors like tracking resource usage, costing techniques and more.

While 2019 has been an interesting year for the cryptocurrency markets, this post will be covering certain engineering and scientific prospects of decentralized and distributed protocols without a deep-dive into a price analysis outlook or other investor related topics.

Cryptography Outlook

Cryptography today seemingly lies at the center of many projects working with distributed systems and protocols, but to truly appreciate the evolution that has brought cryptography to the forefront as prime technology, we must first appreciate all its uses in decentralized architectures today. Several blockchain networks use cryptographic tools to run functions like encryption, digital signatures and hashing.

With other technologies, cryptography is deployed to secure web browsing, run end-to-end encrypted messaging, document signing and even disk encryption. No where however, has the use of cryptography stood out like its use on the Bitcoin Network. For 10 years, Bitcoin's network has been running several cryptographic algorithms that underlie its mining functions, digital signing and key/wallet management functions.

Since coming to the mainstream, Bitcoin has made cryptography and its use in decentralized and distributed networks an emerging technology whose utilization is increasing around the world:

• Countries like China, who recently passed a cryptography law, are taking steps to create a regulatory framework that will set the standards for the application of cryptographic solutions. This framework is inteneded to guide the independent innovation of core technologies, increase investment and accelerate the development of blockchain and industrial innovation in the country.
• With companies we've seen an increase in releases of cryptography solutions. IBM, earlier this year, released the prototype to the world’s first quantum computing safe enterprise class tape. The solution is expected to secure data protected by asymetric encrytion methods which may not be secure in the next 10-30 years.

Propects for the unlocking of new computational capabilities in the computing industry have been increased further by an announcement from Google suggesting researchers demonstrated quantum Supremacy in recent experiments. Businesses and organizations today should start preparing for advancements that will see cryptography deployed to power unprecedented sceientic breakthroughs.

Secure Scaling Outlook

Discussions around scaling decentralized and distributed networks are often associated with the difficulty of the technical consensus-building process, evalution of technical materials and data analysis to fully consider the complex tradeoff between decentralization, utility, security and operational realities. Through the year Bitcoin, Ethereum and IPFS communities have had conversations about secure on-chain scaling on their respective networks.

• At the Scaling Bitcoin conference in Tel Aviv in September, discussions about scaling Bitcoin happened through presentations and workshops. The Lightning based presentations highlighted methods the Lightning Network can be optimized for example, Improving routing with Trampoline Payments, Output: The responsive lightweight watchtower and Acai, a backup protocol for Lightning network wallets.
• For Web3.0 solutions to develop and compete with Web2.0 platforms, a decentralised base layer is what they need and get from IPFS. With its highly connected node structure, IPFS is great at retrieving and serving data. To leverage these two properties to build decentralized applications the network needs to maintain high speed, node availability and a great user experience. Solutions like Pinata's Layer 2 have been developed to provide faster data retrieval services through a pre-existing base layer of nodes.
• One of the more frequent targets for the scalability debate however, is Ethereum. Its block propagation standard has been criticised for being slow yet it remains expensive to transact on, with gas prices up to around 20 cents. In the major network upgrade, Ethereum 2.0, developers are designing a solution that's focused on decentralization and security with layer 2 solutions including sharding, plasma and channels.

Combined with data compression and secure distributed randomness techniques - secure network scaling will ensure Protocols, not Platforms will; change the way we use the internet, increase the creation of commercial decentralized applications and fast-track our migration to Web3.0.

Attack Analysis and Threat Modeling Outlook

Several blockchain networks, particularly Bitcoin and Ethereum, have largely managed to avoid catastrophic cyber security issues largely due to a robust core architecture that has the potential to be safe aganist quantum attacks on their networks core functions. The cryposystems used to create this sturdiness is a combination of hashing algorithms, the number of nodes in operation, and the clear mining and block validation processes.

Immutability is another cryptosystem usually referenced to describe irreversibility of transactions. Data permanence and auditability are critical components of the design for public-permissionless distributed networks. As the nature of network attacks has evolved over the years, the concept of immutability within distributed technology has been revealed to be a potentially costly oversimplification. Beyond consensus attacks, the feasibility of atttacks on side channel implementations of a network have also been demonstrated.

To design security models for the quantum era, network maintainers need to, through probabilistic analysis, quantify the resources involved in initiating an attack using simulations, measurements and experiments with live nodes. This will present countermeasures that are designed to raise the bar for attacks while preserving the openness and decentralization of the network's architecture.

Cryptoeconomics Outlook

Economists studying protocols, with a focus on design and characterization of permissionless networks, have found various economic aspects including; protocol-native aspects, third party market aspects, mining economics, transaction fee market, gas prices and more, all play an integral role in how distributed and decentralized networks are able to function.

With mining economics for instance, Bitcoin introduced block rewards which work to incentivize users to willingly contribute to the network's benefit. In May 2020, we expect a bitcoin halving and in a post earlier this year, I wrote about everything you need to know on the subject. It will be interesting to see how the impending halving will impact the network's economic factors like transaction fees, mining costs and unit prices.

Although decentralized file sharing systems have existed for nearly 20 years, it is modern blockchain networks that have introduced economic features to correct the incentive shortfall. Various networks have deployed creative solutions to high transaction fees including solutions like sub-second finality and more efficient consensus algorithms. We should expect more development in this space.

Conclusion

There are other aspects of distributed protocols that influence its usability, functionality and efficiency. Although, most are still in development, they add unique value to a network. These include:

• use of secure programming languages for protocols & smart contracts
• development of satellite, radio and alternative means of transport/relay
• adoption of off-the-shelf devices for cryptocurrency purposes
• design of non-custodial services offered by trusted or centralized third party

Overall, expect the distributed and decentralized protocol industry to continue to grow as new methods of security engineering, risk management and crypto-economics are developed.