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diff --git a/content/entry/on-blockchain.md b/content/entry/on-blockchain.md index 40bb1b0..b571056 100644 --- a/content/entry/on-blockchain.md +++ b/content/entry/on-blockchain.md @@ -11,7 +11,7 @@ I'm going to talk about blockchain in the context of cryptocurrencies. Hencefort # Blockchain's Successes ## Cryptocurrency Markets -For starters the multi-billion dollar cryptocurrency market may not exist without blockchain. Even non-blockchain based cryptocurrencies reference the blockchain based Bitcoin in their whitepapers. While there are functioning non-blockchain cryptocurrencies, they might never have been conceived without the initial inspiration from Bitcoin. Bitcoin is still the most valuable coin and it still uses blockchain. As I write this, it's nearing an all-time high of $30k USD per 1 BTC. +For starters the multi-billion dollar cryptocurrency market may not exist without blockchain. Even non-blockchain based cryptocurrencies reference the blockchain based Bitcoin in their white papers. While there are functioning non-blockchain cryptocurrencies, they might never have been conceived without the initial inspiration from Bitcoin. Bitcoin is still the most valuable coin and it still uses blockchain. As I write this, it's nearing an all-time high of $30k USD per 1 BTC. ## Smart Contracts Shortly after Bitcoin Vitalik Buterin[2]'s blockchain based Ethereum[3] cryptocurrency hit the scene featuring smart contracts[4]. Smart contracts are programs that automatically run on top of a blockchain. They enable decentralized exchanges, ERC20[5] tokens, CryptoKitties[6], decentralized cloud storage payment, governance, and digital contracts. These use cases are only possible because of the security assurance blockchain provides. @@ -19,7 +19,7 @@ Shortly after Bitcoin Vitalik Buterin[2]'s blockchain based Ethereum[3] cryptocu ## Darknet Markets Since cryptocurrencies enable anonymous irreversible transactions with no middlemen, they are used on darknet markets[7] which otherwise wouldn't exist. Some say darknet markets have done more to prevent drug-related violence than the DEA ever has. Those same markets also sell guns, stolen credit card details, and hackers for hire. It's hard to say one way or the other if they are an overall force for good. But darknet markets are only possible because of the anonymity of blockchain. -Blockchain is a powerful, transformational technology still relevant twelve years after the Bitcoin whitepaper[8] was originally published. Love it or hate it, there's no denying its influence on cryptography, pop culture and finance. +Blockchain is a powerful, transformational technology still relevant twelve years after the Bitcoin white paper[8] was originally published. Love it or hate it, there's no denying its influence on cryptography, pop culture and finance. # Blockchain's Failures You'll notice I still use blockchain to accept donations[9] for this website. That's because I know of no better way to accept anonymous online donations. The moment I know of a better way I'll update my donation methods. If GNU Taler[10] ever gains popularity, I will use it instead. In any case, I've given the devil his due, so now I'll move on to the problems with blockchain. And blockchain is fraught with problems. @@ -38,7 +38,7 @@ In any distributed system, partitioning is a given. Blockchain must tolerate arb Consistency can't be sacrificed either. Nodes must agree on which blocks are included in the blockchain otherwise you don't have a blockchain. But that means the blockchain is sometimes unavailable. That's a big problem because if you're trying to perform a transaction, you can't have the client program telling you to come back later. No one would use that cryptocurrency. -To resolve this, blockchain makes a tradeoff between consistency and availability. Blockchain is eventually consistent. As the blockchain grows, nodes are guaranteed to eventually agree on new blocks. In the Bitcoin blockchain large transactions are considered final after they reach 6 blocks deep in the chain. Transactions deeper than 6 blocks are consistent across nodes. +To resolve this, blockchain makes a trade off between consistency and availability. Blockchain is eventually consistent. As the blockchain grows, nodes are guaranteed to eventually agree on new blocks. In the Bitcoin blockchain large transactions are considered final after they reach 6 blocks deep in the chain. Transactions deeper than 6 blocks are consistent across nodes. As for availability, nodes in the Bitcoin network have a mempool. A mempool or transaction pool is where transactions wait to be included in a block. Any given transaction will find its way into a block which will eventually become a finalized block so long as the Bitcoin network isn't congested. The catch is Bitcoin can only perform about 3-7 transactions per second. Faster coins can handle tens or hundreds of transactions per second, but they all have some transaction limit due to the CAP theorem. @@ -124,7 +124,7 @@ Then there are projects in use today that work well and are likely to continue t And then you have projects that have been important in the past, but should probably be abandoned now. They have no unique properties that make them especially useful. They aren't making any major innovations. It's probably a waste of time to develop for them other than critical bug fixes. I'm looking at Bitcoin[33], Bitcoin Cash[34], and Litecoin[35]. ## Vaporware -Finally there are the projects that are going absolutely nowhere. They are held up by marketing and the illusion of progress through smoke and mirrors. They trick gullible investors and sometimes themselves into thinking they are the next big thing. When you look closely at their whitepaper and fundamentals it becomes clear their solutions don't work in the real world. Iota[36] is in this category. It's centralized, yet it has been promising decentralization for years with no way to get there. When evaluating these kinds of projects, remember Hanlon's razor: +Finally there are the projects that are going absolutely nowhere. They are held up by marketing and the illusion of progress through smoke and mirrors. They trick gullible investors and sometimes themselves into thinking they are the next big thing. When you look closely at their white paper and fundamentals it becomes clear their solutions don't work in the real world. Iota[36] is in this category. It's centralized, yet it has been promising decentralization for years with no way to get there. When evaluating these kinds of projects, remember Hanlon's razor: > "Never attribute to malice that which is adequately explained by stupidity." |