10th December 2019
What the Blockchain Ecosystem Should be Aiming for in 2020
Excuse the quality of the video, it was a Beer and Blockchain event, after all, so all in good spirit.
Besides that, we hope you enjoy watching our Chief Blockchain Architect, Paddy Cerri, talking about the current problems facing the cryptocurrency space today and where we need to be heading over the coming year. The full transcript is below 🍻.
Running More Validating and Constructing Nodes Ensures Decentralisation
If you think about it the whole of the Bitcoin network could run on a Mac Mini. A Mac Mini can do 10 transactions per second no problem, so what this means is what matters is decentralisation. So, if we look at Bitcoin and look at Ethereum, what we’re seeing is that the amount of people running the network and by running the network I don’t mean the validators, validation is fine, validate, don’t trust, but people who build the blocks, they're the ones who are involved in anticensorship. Validating the chain has zero effect on censorship, you can’t force someone to include a transaction in a block by being a validator. The only way you’re going to get it so that it's not an issue, the only way we’re going to ensure that censorship never takes place is by having lots and lots of nodes.
Since there is an Economic Incentive to Mine Cryptocurrencies, They Become Centralised Industries
The truth is that all the miner centric coins whether they are PoS or PoW, they are industries and just like every single other industry on the planet, this has got nothing to do with clever mathematics, it’s got nothing to do with clever cryptography and as an industry, it is susceptible to economies of scale. So, what I am failing to see in the space at the moment, is an answer to the problem that faces us which is there is only one way that the Bitcoin mining industry ends, and the Bitcoin mining industry ends with one miner, that’s the only way it can end. It’s easier than with traditional mining industries because there you have the geographical issue of finding the product to mine. So, this is something that isn't talked about and I know there are loads of wonderful things happening on top of it but at a low level, the developer community are starting to realise. There’s a lot of talk of ASIC resistance, impossible rubbish, there is a lot of talk about coming up with ways of changing the PoW, but that seems to destroy all of your security.
How Removing the Economic Incentive to Mine Allows for True Decentralisation
The only way you can defeat centralisation is by removing the incentive for the miners to get paid in cash, removing the incentive for the industry to be formed around the production of the nodes. So, decentralisation in the node count is something that has wavered this year and that is just one aspect of it.
Base Layer Protocols Must Be Immutable from Inception, to Ensure Trust and Faith in The Protocol
Then you’ve got to look at another aspect of it, your blockchain is dependent on your developers. So what you find is, I’m a developer and you know this, you get two smart developers, you’re on the Bitcoin dev email list and I’m telling you those are the smartest people on the planet, same as Ethereum, I’m on both of those, I mean mind-blowing levels of intelligence. If you get two smart developers in a room, I guarantee they will disagree, one wants to go left and one wants to go right. Both guys are really smart but one of them is saying this and one of them is saying that, this happens all the time and then you’re stuck in the middle, and so you will end up with BTC and BCH and on a bigger scale you’re going to end up with Bitcoin and Ethereum. They both complement one another, they’re both arguing with each other and nobody knows what to do and so there is only one solution to that problem. This is going to destroy your coin, and your ability to just have faith that these coins need to survive. They need to be solid, the protocol needs to be immutable for you to give trust and faith in the protocol and the only way you are going to do that is by removing the developers. You need a protocol that is finished, none of these protocols are finished, they are all works in progress, they all need ten years to finish. Ethereum is the worst case, and Bitcoin is trying to fight it, they would like to add some aspects and so ossification of the protocol is taking place.
For a Blockchain to Gain Global Acceptance It Must Never Change, Like the Internet Itself
Much like the Lindy effect with money and Gold, unless it’s been around for ten years you can’t trust it. We always see this with coins on a developmental level, they change too fast and we can’t trust them. The reason protocols take over the Internet is because they don’t change, POP3 hasn’t changed for 30 years and it still hasn’t changed. You want to integrate with Google, you want to get your email from Google and not use the intermittent web we use POP3. POP3 is 40 years old and we haven’t come up with a better protocol, it doesn’t matter. What matters is that POP3 hasn’t changed, what matters is that TCP/IP hasn’t changed. The fact that these protocols, do not waver in their protocol is what makes them globally acceptable and so if you want your blockchain protocol to start having global dominance, you get rid of the developers, because that’s all that matters. It’s not whether you do the greatest and most amazing amount of things, what matters is that you are good enough and as long as you’re good enough, you can do the things you want to do.
A Summary of Industry Challenges Discussed So Far
So, we’ve got these node issues with massive centralisation of mining. We’ve got these developer issues where these protocols aren’t finished. We’ve got lots of different groups of smart people arguing about what they want to do about these coins and they just have to finish them.
Governance Ruins the Essence of Ever Lasting Protocols, Restrictions Are the Mother of Innovation
Last, but not least, you’ve got your governance, who is in charge of these coins? Who is telling you what you need to do? Who is pushing their agenda? You don’t want that, you don’t want someone in charge, you don’t want a leader, you don’t want a foundation. What you want is for your coin, your protocol to be able to stand on its own two feet. There’s no one in charge of the internet. There’s no one in charge of HTTP. There is no one in charge of these global earth spanning protocols. That’s why they work and that’s what we need, we need come up with the POP3 in crypto. We need to come up with an actual blockchain protocol that we can all look at and realise what we can and can’t do with it. That’s much more important than thinking, wouldn’t it be good if it could do this or wouldn’t it be good if it could do that. If you have restrictions it is the mother of innovation, knowing what you can and can’t do with your blockchain is far more important to the overall adoption. So, for me that is what I would like to see moving forward because what we are seeing currently is all of that thrown out of the window.
Leading Coins in the Space are Becoming More and More Centralised
Ethereum is funny because it’s got such a great platform with its Turing completeness, but if you switched off MetaMask tomorrow, which is the little fox head on your browser, Ethereum would stop running. It’s not decentralised, that’s only centralised. There’s no way that anybody is running Ethereum 2, you know I’m head into the ETH 2 specification, it’s total insanity, it’s madness, nobody is going to be able to run this protocol except for one person. Concensys bought Europa about four weeks ago because no one is running the nodes required.
Blockchains Killer App is Anti-Censorship, Which Has Easily Been Forgotten
This is the only thing we want from a blockchain. It’s not transactions per second, it’s not features, it’s anti-censorship. So, I need to be able to send value to somebody across the world whenever I want, and no one can turn the system off. Until we understand that fundamentally, it’s a very difficult argument to make. We’re doing all these wonderful things and it’s like don’t worry about all this other stuff because it will only matter when it matters.
We Need a Blockchain Worth More Than Every Other Company on the Planet
Right now, there isn’t enough, the Bitcoin space is only 200 Billion USD. You can’t even price Apple in Bitcoin, it’s like how much is Apple in Bitcoin, it’s forty million or sixty million. Not only is Bitcoin or whoever the eventual winner is, not only does it have to be worth more than any other company on the planet just so you can price it. Such a protocol has to be worth more than everything else put together, the sum of everything else. So, when they talk about the volatility of cryptocurrency, we're still so tiny, it’s such an infinitesimal space that we’ve got so far to go and these little blips, they're nothing. It’s not going to work unless we’re worth a thousand times more than every else, that’s when we’re going to get to see what these things can do. So, for me that is where we need to be heading in the next year, we need to be coming up with a blockchain that does that, and I hope that we can do that, thanks very much.