Blockchain - So Many Issues! But So Much Innovation...
We are so early...
We are so god damn early into this tech, it's like getting on the internet in 1990 or even earlier! It's a once in a lifetime opportunity, not kidding! It's a once in a lifetime opportunity to get in on a new asset class, these types of opportunities don't come around many times, I would say that once every couple of decades if not centuries...
When a person invests in crypto they are basically investing in a new alternative economic system based on scarcity (at least in most cryptos), an economic system based on scarcity living side by side with an inflationary economic system, do you know what this means?
An inflationary economic system even though it has its advantages in terms of consumer spending it will, with time, tend to 0... the paper that most people call money will, with time, lose all its value, while the scarce economic system will only grow in value, it will grow to infinite as more people convert their "time" to crypto. But there are some things that need to be fixed!
We have so many problems in cryptos, especially when it comes to investing! We have more problems than a teenage girl! Let me name a few of the problems that I find most concerning:
BTC, BCH, BSV, most people look at these and don't understand the difference between them, most people don't look into the tech, but the tech is important! We are investing in a highly speculative market that is based on tech, not knowing anything about the tech is like trying to walk a minefield blindfolded, you will either have a lot of luck or you'll explode midway... and even knowing a little about the tech and losing the blindfold, we'll still have to walk that minefield, a minefield of trying to see what is most useful and most prone to be adopted, a minefield of speculation!
The differences between them are mostly based on the size of the blocks and the size of the blockchain, and ETH has exactly the same issue to be honest...
Explaining it without going too deep into the issue, bigger blocks and a bigger blockchain size make the hardware required to verify transactions, to run full nodes, more and more expensive. With the increased price of the hardware comes the issue that many people that want to support the network can't because they don't have money to buy the best hardware, so, we lose a lot of decentralization this way, we lose censorship proof bit by bit...
BTC is by far one of the easiest ones to confirm transactions, it has a small block size, a small blockchain size, anyone anywhere can verify transactions and verify the whole blockchain with just a phone.
BCH increases the block size by bit, with bigger blocks comes more tx per second, but, just like I mentioned, not everyone can confirm transactions on it because the hardware requirements increase too, in a network that doesn't have much hashing power this is really worrisome because it concentrates power in some people, a crackdown by any government or one bad actor threatening these people would result in the loss of many BCH, in the whole networking collapsing, in the loss of investor's trust.
ETH has the same issue, big blocks and a big blockchain size, it becomes harder and harder for someone to run a full node, a real full node that confirmed all the transactions on the blockchain, last time I checked, with a 2019 laptop with an SSD it takes more or less one full month to confirm every single transaction, it is a lot of time... running a fast_sync node with assume_valid = 1 is much quicker, more or less one day, and it might be very similar to running a full node, I would say that it is 99,999% like running a full node, but not a true full node...
Even Vitalik understands that this is one of the issues with Ethereum, he already tried to convince the community to restrict gas limit at least until ETH 2.0 (ETH on PoS), which, in theory, stops this centralization of hashing power from happening. Even though he has been losing power inside the ETH community, with organizations like Consesys and Maker gaining lots of power, even more than Vitalik at the moment in my opinion, he was able to warn people and many of the nodes and core devs took notice and are watching this issue closely.
Some people also argue that a full node in ETH needs to have an archive node with the full history of the blockchain, it doesn't! An archive node can be extracted from any full node, it takes time, but it can be extracted from it. Of course, some archive nodes are needed, but not every single full node having one.
BSV is the worst one, the size of everything, including Craig Wrights' ego and pumpkins, make the whole blockchain so centralized that I'm not sure if there is more than one single big server confirming transactions worldwide...
Is this decentralization issue really important? Well, I would argue that it depends on what the aim is, for ETH I think we need enough decentralization to be censorship proof, but how much is that? Does everyone need to confirm transactions? Who knows, unless we have a huge crackdown by a government we can't know how much decentralization is needed to keep the blockchain going even in times of oppression. For a store of value, I think the best scenario is to enable everyone in the world to confirm transactions, it doesn't matter where you are and how much money you have, you can probably confirm transactions and keep the network going, so, for a Store of Value capable of withstanding every government in the world getting corrupted I would say that Bitcoin is the winner... but this is just personal opinion of course.
Business model and tokenomics
People think that the number of tx is one of the most important things a blockchain has, but I would argue that it isn't, the business model, the way the token works is, in my opinion, one of the most important things there is... it doesn't matter if you have a bazillion tx per second, if the token doesn't matter when someone is using the blockchain and, in some cases, it's inflationary without a max supply, there is no reason for the price to increase, give it time and the price will go down faster than a stripper on coke (the post was getting too serious).
Good strong business models and tokenomics that aim for cashflow to buy the token and, in an inflationary system without a max supply, burn the token, are needed to keep the price increasing long term... if not, it will only turn out like many cryptos are at the moment, with the price decreasing.
The internet has been around for a couple of decades now, and guess what, most websites are monetized... how? Mostly through Ad revenue and data selling... The whole internet runs on ad revenue and data selling, the issue is that everyone contributes to these websites (Youtube, Facebook, Twitter, Reddit, Games) and only a few get anything back! We, users, provide the value, provide the network and userbase, and the big corporations keep all the profit from our time and hard work, this is wrong! But blockchain and crypto can turn this whole economic system upside down!
By removing big greedy third party corporations through cryptocurrencies and providing a token for each community, each website, each game, we can divide all the value that comes from ad revenue through all the users! We can literally have an open-source game where everyone contributes to the development, that has ad revenue and that ad revenue is used to buy and burn tokens so that all the rest of the tokens increase in value, a community that generates and receives its own value! It's amazing!
But most blockchains don't do this... most blockchains try to suck in the retail investor into buying the token and don't provide any value to the token hodler long term... token hodlers are left hodling bags down to 0, down to hell.
Good business models in crypto are needed! If not, say bye bye to all your money!
Fights and Maximalism
I hate maximalists and inner fights in crypto, no matter what shape, form or crypto they come from... how can someone be 100% certain that the blockchain x, y or z is the only one that is going to survive? Or that the a, b or c way is the only and true way to scale cryptocurrencies? How can someone have that big of an ego to be 100% certain of something? Like a philosopher once said "I know that I know nothing", or like another great philosopher once said, "You know nothing John Snow.".
Unless we now have fortune tellers in crypto, it's impossible to be 100% certain of which blockchain or way to scale is the right one. Variety and diversity are the best things in life, variety and diversity make everything exciting! Diversity is what evolution is all about, even in blockchain! Having lots of people try different ways of solving the same problem will only make the tech and space grow exponentially faster in my honest opinion...
Even in the middle of the ICO craze we had, with the number of scams we had and still have, we got so much diversity and projects that were, and some are, trying new things with blockchain that righ now everyone in the world is paying attention to the cryptospace! The energy sector, the supply chain sector, the medical sector, every sector is looking at the tech and trying to figure out how blockchain can be applied to their business, how the tech can remove third parties and central points of failure! How the tech enables the reduction in transaction fees worldwide allowing for new ways to spread the value created between more people!
Just to name a few:
The gaming industry is looking at how implementing NFTs, game items that run on a blockchain, might enable new sources of revenue through fees, renting, selling, etc... Enjin already had lots of success in some communities where NFTs were implemented, some businesses saw thousands of % of increased revenue! Imagine all the jobs created by this!
The health sector is looking at how medical user data can be monetized to big pharma to bring value to users, to increase the flow of data into research and enable faster deployment of anti-epidemic mechanisms world-wide.
I could go on and on about more issues with the tech, about more issues with the investors and communities, and I could also talk for hours about all the good things that are being developed and that can be improved in the blockchain industry. But let's leave content for the next time.
Question of the day: Do you disagree with any of these issues? What other issues do you see at the moment?