There Will Not Be One Blockchain to Rule Them All
This article was originally posted on April 9th, 2018.
In the run up to our big product launch on May 1st, our team is sharing a few ideas on the future. Recently that’s included a fairly radical proposal for solving the US debt problem, and a proposal for advertising platforms to use blockchain industry-specific requirements rather than blanket bans. Today, I’d like to share a thesis on the future of blockchains.
The antithesis is: some prominent blockchain industry figures have suggested that the future of blockchain will be winner-takes-all with transactions consolidating into one protocol/blockchain. This future would involve a single blockchain to rule them all with others fading.
My thesis is that there will be many winners as a diverse set of blockchains emerges to cater to different use cases.
Here is my argument:
- Developers create applications for a wide variety of use cases.
- Developers use computational resources, such as blockchains and linux servers, to deploy such applications.
- The computational nature of a given use case determines which computational resources are most appropriate to use for it. For example, informed developers would select memory-optimized servers to use for a memory-intensive use case.
- Likewise, the nature of a use case will determine which blockchain developers use for it. For example, a privacy-sensitive use case would benefit from a blockchain with greater privacy protections rather than built-in identity features. Another example is that some censorship-susceptible applications would benefit from greater decentralization whereas others, such as private blockchains used for internal accounting purposes by an organization, would benefit more from blockchains with greater administrative controls.
- Moreover, there can be considerable downsides to using a blockchain not optimized for a given use case. For instance, unnecessary additional decentralization could increase the cost of computation, or implementing a smart contract on a blockchain not designed to support them could increase the effort required for implementation of the contract and integrations with it.
- In some cases, developers may even need to create their own tool/blockchain to get the properties they need to most effectively solve a problem, such as is happening with certain decentralized storage projects in which creating a new blockchain enables the use of a custom consensus protocol that appropriately incentivizes file storage.
In other words, not every problem is a nail and so a hammer isn’t always the right tool to use; likewise, blockchains with different properties provide a diverse toolkit that developers can use to appropriately solve a wide variety of problems.
Given the above, I believe that the future will involve a diverse ecosystem with some winning general-purpose blockchains alongside a wide variety of also-winning domain and application specific blockchains with properties tailored to each domain.