There are three types of folks you’d usually meet on Crypto Twitter.
- “The blockchain is just an overhyped technology. It’s slow and it sucks”
- “The blockchain is good for Bitcoin, and nothing else. Everything else is an alt/shitcoin/scam. Also, Satoshi is my lord and savior”
- “The blockchain is a monumental shift in computing, and we’re just in the beginning”
I’m in the third camp, and I’ll tell you why.
Blockchain Redefines Data Custody
Have you heard the phrase “Be Your Own Bank”?
This phrase pretty much encapsulates the value proposition of Bitcoin: You don’t need banks because you have a decentralized network that enables you to control your own money. You, and no one else.
So in essence, we’re talking about a shift of custody.
Banks -> You.
But what if we look at Ethereum? What is it?
Ethereum’s popular feature is “smart contracts”. While the formal definition of “smart contract” was coined by Nick Zsabo, we won’t be delving into semantics. Instead, we’ll look at what Ethereum actually does.
A “smart contract” on Ethereum is a collection of functions that can do whatever the creator programmed them to do. Essentially, it’s like deploying a collection of functions — an API. Only this API is hosted in a decentralized manner. Once deployed, you can access these functions from anywhere and pay a fee for using them. The Ethereum blockchain then manages the state — the information that these functions use to operate — on the network.
Smart contract code — in the flesh
Let’s try to apply Bitcoin’s slogan to Ethereum: Be Your Own Cloud Provider. What does that mean?
It means that you get to host code on a decentralized cloud. Code that no one can shut down. Code that no one can censor. That no one can alter. You, the deployer, are the sole custodian of the code. And you don’t pay Google or Amazon to run it. You pay miners — independent participants in the decentralized network — to host it, and to execute computational operations.
It’s a Question of Control
So what is the essential characteristic of the blockchain that is so impactful? What changes when you switch from centralized to decentralized networks? Custody. Control. Ownership. Choice.
Is this valuable? Yes!
Today, you are not in control. Your data is being monopolized by big corporations. You have no idea who has it, who might have hacked it, or to whom it was sold.
Some may argue that this is actually fine. That the services we get from the tech giants are worth the price of admission. And perhaps they are right. But current trends are showing us that even this is possibly unsustainable.
Look at all the flak Facebook has been getting as of late.
No wonder they are looking at blockchain solutions to help them with their legal conundrum as of late. Let’s face it, it’s not easy being the sole custodian of over 2 billion accounts + their private data. Wouldn’t it be a great idea to offload this responsibility to a decentralized network and mint a native cryptocurrency to pay for network operations?
This means that Facebook gives up custody of user data. But this also means that they get to print their own money. And this means that they carry less responsibility, but make potentially the same revenues.
There is a shift here waiting to happen. From centralized to decentralized platforms. It’s inevitable because it makes sense. It makes sense for big corporations because nobody wants the scrutiny Zuck is enjoying. It makes sense for users because they get sole ownership over their online data.
I think it’s a question of when not if.
But When?
Today blockchain technology is undoubtedly slow, and definitely not ready for primetime. The lack of mainstream adoption so far has attracted a large number of trolls that descend on any project that dares to build something beyond the limited scope of “Bitcoin”.
But when will this shift happen? Once we resolve the current open issues:
Blockchains need to become good enough to build things on. This means the following:
- Blockchains need to scale better. Bitcoin is moving along with the Lightning Network and other 2nd layers solutions. Ethereum is flirting with Proof of stake, plasma and sharding to help speed up the network. EOS is doing… whatever it is they are doing. This is only a question of time.
- Interoperability between various blockchains needs to become a reality. The blockchain ecosystem is diverse and great, but each blockchain today is primarily just a protocol. A very low-level entity in the tech-stack. For both developers and users, our lives will become much simpler if accessing the features of each blockchain wouldn’t require a unique set of tools and apps (wallets, exchanges). Nobody wants a dedicated wallet for every chain or coin. Nobody wants to learn a unique programming language for every single decentralized network. Moreover, great interoperability would mean new types of cross-chain functionality — cross-chain smart contracts, atomic swaps, and other goodies.
- Great Developer Tools: Once we have great interoperability we will also need developer tools that will enable us to build on top of the various decentralized protocols. We could build truly amazing decentralized apps if we could access all of the power of current decentralized networks that are available.
- Custody needs to be resolved. While moving to decentralized networks is all nice and dandy, this just means that the responsibility of safe-keeping sensitive info (passwords, private keys) now falls squarely on the users. This is a tough pill to swallow, but key management can be significantly simplified. For this, we need a self-sovereign identity for users and great private key management tools.
(Psst. I’m working on these. Check out Safebit).
Wordplay
For the heck of it, let’s play with “Be Your Own X”. As long as we’re talking about decentralized systems, I think this phrase applies.
- ICOs? Be Your Own Investment Bank
- Decentralized identities? Decentralized platforms? Decentralized social networks? Be Your Own Facebook/Google
- Smart contracts? Be Your Own Cloud Provider
Got more? Put them in the comments below.