In Blockchain, fundamentally, the majority has forgotten the fundamentals, which it appears, is fundamentally fundamental to the current Blockchain market failure. (several before as well)
Next time you look at a Blockchain Platform, ask yourself about the consensus algorithm of the platform you are using.
Then ask yourself about the transaction you are about to transact.
Do they match up? And is that important?
What if it was, really, important (and it is) but no one cared?
Here are a few true things.
There are three types of consensus algorithms, Private, Community, and Public. Each with a graduating level of immutability, and censorship resistance.
And there are three types of blockchain transactions, Private, Community, and Public. Each with a graduating need for immutability, and censorship resistance.
Private Blockchain consensus algorithms allow for quick, cheap, transactions, but they are not very censorship-resistant. Either party in a private chain could potentially change, edit, or delete transactions, or even blocks. If both parties trust each other, this will not be an issue. Very cheap to build and run, quick down and dirty transaction data.
Private Blockchain consensus algorithms are very fast and cheap, but they are not Byzantine Fault Tolerant and are not censorship-resistant. Either party in a private chain could potentially change, edit, or delete transactions, or even blocks.
Community Blockchain consensus algorithms allow for trust within a network. Here you must trust your community. EOS for instance, you need to trust the 27 people who run EOS, not to change, edit or delete your transaction.
Community Blockchain consensus algorithms are not very censorship-resistant. The platform could potentially change, edit, or delete transactions, or even blocks. Community Blockchain consensus algorithms are very fast and cheap, but are only qazi Byzantine Fault Tolerant, but not quite because they can be edited, and therefore are not censorship-resistant.
This is fine if you trust the platform or if censorship is not an issue. It provides very cheap, inexpensive transactions, quick down, and dirty. It is not fine if you are trying to add public transactions to a Community platform, which I believe is ethically challenged. This is where most of the market is today.
Public Blockchain consensus algorithms provide the necessary trust for the transaction. Public Blockchain consensus algorithms are Byzantine Fault Tolerant and censorship-resistant.
If you are looking to store public transactions, and the majority of transactions are public transactions, then you should be on one of these two public consensus algorithms, Proof of Work (POW) or Proof of Stake (POS).
Speculation has killed one of the two viable Public Blockchain consensus algorithms. Speculators drove up the price of ETH using a pump and dump strategies and also drove up the price of associated GAS which provides the incentive for adding blocks to the chain. 40-cent smart contract executions are now hundreds of dollars. RIP POW, it was a wild ride, and we almost made it but POW is not speculation resistant.
Speculation is one of the worst things we do to each other as human beings. 80% of the time someone loses, and 15% of the time someone wins. The 80% of the time that someone loses, it was main Street 401k, and the 15% of the time someone won, it was wall street and they already have too much money. The worst part is, this accounts for 20% of the activity in the US, and it adds zero to the GDP. Nada, Zilch, not a thing.
Speculation is one of the worst things we do to each other as human beings. POW was not speculation resistant. I wrote about this some time ago here in better detail: https://michael-noel.medium.com/tokenomics-is-not-economics-426426ea44bc . Tokenomics is not economics that is for sure and this is the limbo we are in. Scalability and Usability in the low to will not work in all areas of the gauge.
“And still we get new Platforms coming around and maybe the bigger question is why in this day and age are we still seeing people launching blockchains. And then the second question: what motivates people to do this?” asks the “Blockchain Gandalf” on his youtube channel. He goes on to add, “So the first question I have no good answer for – we have Bitcoin, which is the granddaddy of this space, and there’s the Lightning Network attached to it so there we have a means of transaction and a store of value that has over a decade worth of provenance and with the Lightning Network you solve the problem of transactions, but of course, Bitcoin doesn’t have a particularly sophisticated scripting language built into it so if you want to do anything complicated like Defi you need something better.
For that, we have Ethereum, the original smart contract blockchain, and it’s been going for nearly a decade too – it does have problems with transaction rates, they are working on solving it but because Ethereum goes so far back all the work that has to be done needs to be done slowly and securely; they can’t rush stuff.
Blockchains that emerged around the Ethereum time based on the Bitcoin model as well, so if you are looking for a particular kind of blockchain you can probably already find one out there which leads me back to the question: why would someone release a new smart contract blockchain at this time?
We saw this with Solana, and a bunch of people did very nicely out of that. And that’s another example of a blockchain that positions itself as an Ethereum killer. I think you have to ask yourself the question: if your mission or goal is to be a killer of X, how good are you? Is that a solid foundation to build a project on, especially in the blockchain space, given that blockchain is about community and collaboration rather than the traditional corporate model of cutthroat actions to try and crush your rivals?”
Fortunately, these are problems above my pay grade. But as a citizen, I can observe and report, and that is what I intend to do. Because that challenge is one that I am willing to accept, one I am unwilling to postpone, and one which we (as a species) intend to win.
There is a very high-level group who is meeting and chatting about these very things at this very moment. In the coming weeks, I am going to try to Interview some of these patriots, who are working toward better outcomes. This group has a public forum coming up this Friday at 10 am New York. Please accept my invitation to attend the upcoming Government Blockchain Public Forum. You should consider attending. You should also plan on bringing your two cents with you. This is a free, online public forum.
The Government Blockchain Public Forum – The purpose of this group is to share the use of blockchain in the public sector. It is open to the public and should be used to share lessons learned concerning blockchain use in the public sector.
This group meets this Friday at 10:00 AM (New York).
Big shout out and Thank you to the Government Blockchain Association
Michael Noel CBP
aka Biz Builder Mike
eschew obfuscation, espouse elucidation