They provide robust security to tokens backed by assets in the real world. Unfortunately, like dragons guarding gold, although secure, they are also slow, lethargic and difficult to scale.
Block-chain security (thousands of computers confirming every transaction) is a double-edged sword, forcing transactions to wait in queue to be confirmed by everyone. This gives them un-hackable security, at the cost of speed.
“We propose a method for decentralized autonomous applications to scale to process not only financial activity, but also construct economic incentives for globally persistent data services, which may produce an alternative to centralized server farms.” -Plasma Whitepaper
Plasma is a set of smart contracts that let you create ‘baby blockchains’ on Ethereum, that have three neat features that make them fast.
Rather than having to wait for the slow, secure blockchain, an application saves its original state on Ethereum, then jumps to these baby chains to scale quickly. Once processing is complete, or in case of a dispute, the final state is saved back on Ethereum, which guarantees the security of the baby chains.
credit: deviantart
This opens up a plethora of cool things you can do on these baby chains. e.g.
In a nutshell, plasma enables Ethereum to run world wide computations, for billions of users, with trillions of records stored, at billions of transactions per second.
Already, OmiseGo is implementing plasma for the next generation of financial services. Omisego will enable rapid value exchange between fiat and decentralized currencies and across jurisdictions and organisational silos.
Ethereum created a platform to tokenise assets, and this opened a large economy for businesses supported by tokenised assets. With plasma, Ethereum has created a platform for anyone to create fast blockchains, that are secured by Ethereum as the root chain.
