I do believe that a combination of software and hardware will provide the best path to virtually no constraint to blockchain scaling with almost unbreakable security and instant transaction confirmation. However, this is not likely to happen until there is large scale acceptance.
Intel Conducting Experiments to Massively Scale BlockchainSid Kalla | Published on April 21, 2016 at 16:52 BST
Intel, the largest chip-maker in the world, is looking to trusted execution environments on its hardware chips to enhance security and privacy for blockchain users.
Speaking at the Tomorrow’s Transactions conference in London this week, Kelly Olson, director of the distributed ledger technology group at Intel, discussed ways it is possible to use a "secure enclave", similar to what Apple uses for its Touch ID, to increase blockchain security.
Olson's group is conducting research on large-scale deployments of blockchains that could scale to several tens of thousands or millions of nodes, though he said the work is still in early stages.
Still, Olson made the case for using secure hardware solutions that can provide a trusted computation environment. The immediate use case of such a hardware solution would be for key management in blockchains.
Discussing bitcoin specifically, Olson noted that even though the public blockchain network itself has been very secure, users have experienced losses due to lost or stolen private keys.
Olson said:
"While initial blockchain deployments like bitcoin have proven to be quite secure, they have shifted the burden of security from the network to the endpoints that write to the blockchain."
Olson discussed the use of such a secured hardware computing environment not just in security, but also privacy.
The goal is to bring privacy to the blockchain without centralization, he said, which could prove a difficult task. One proposed solution is to treat the hardware itself as a trusted third-party that can provide a level of verification that is generally either publicly distributed or privately validated.
“Privacy is one of the most difficult problems to solve, as transaction validation and transparency often go hand in hand," he said.
Intel experiments
Olson also offered new insights into the blockchain experiments ongoing in Intel's labs.
For example, he said that his team has been working on using blockchains that can be highly customized, where users could change the consensus mechanism of the blockchain or impose participation restrictions.
However, the main differentiating factor between what Intel is working on and what startups like R3 have shown, he said, is scale.
According to Olson, his tests indicate that traditional distributed consensus mechanisms like RAFTdon’t scale well beyond 100 nodes or so. However, Intel is looking at cases where the blockchain might scale to potentially millions of nodes.
In order to scale the blockchain sufficiently, he suggested the use of ‘sharding’, a technique that is also being actively explored by Ethereum, although Intel’s implementation may be different.
The idea is to partition the data in such a way that strict ordering of events is not essential, unless there is a specific use case, and therefore these 'chains' can be separated out and run in parallel.
Future of Blockchain
Finally, Olson touched on the evolution of blockchain and its use cases, which he divided into three broad phases.
The first, he said, is a currency application, like bitcoin; the second lies in the creation of digital assets; and the third centers around identity and reputation.
Notably, it was identity and reputation management that was the use case that Olson believes will provide the most value to the end consumers.
But while he acknowledged the potential of this technology, he warned that the industry needs to be pragmatic. He believes distributed ledger technology is still being worked out today, and is not appropriate for the enterprise as it now stands. He was also skeptical about the use of blockchain technology in financial clearing and settlement anytime soon, given the kinds of regulations that are required in the industry.
When asked by a member of the audience about the first real use case of blockchain technology, Olson said that he believes it will, in fact, not be in the financial industry.
Instead, he believes it is more likely that some sort of digital asset being represented on the blockchain is more likely the case, such as tickets to a game, or online-only tokens such as in-game credits.
Source:
http://www.coindesk.com/intel-hardware-security-blockchains/ 
