submitted by /u/astrum5000
Notes on the Fundamental Properties That Blockchains Unlock
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Blockchains are sometimes presented as mystical creations, but the main significant thing about them is simple: they are digital substrates which unlock unprecedented levels of protocol adherence, censorship resistance, and persistence (PCP) guarantees for the software that they run. For some applications, these properties can prove very valuable. Here they are spelled out:
Those main seem intriguing, but what contributes to a digital substrates ability to guarantee them? The contributions mainly comes from two characteristics:
With those terms out of the way, we can dig into an analysis of the two main digital substrates for running software: servers, and blockchains. Let’s take a look at each of them in turn to better understand how they compare in their PCP guarantees.
At a high level, a server is a single computer running software that people can interact with over the internet. Servers are what the internet is built on today. That being said, they don’t offer the strongest PCP guarantees:
Now that we’ve seen what servers are capable of, let’s see how blockchains compare.
At a high level, a blockchain is a network of servers that redundantly execute the same software and reach consensus on its status through a system of checks and balances. Part of its power lies in its inclusivity - anyone can contribute to the network by running a node without needing to ask anyone for permission. The idea of blockchain is to be the digital substrate which best maximizes PCP guarantees:
So What? When Does It Make Sense To Use a Blockchain?
Deciding between running software on a server or a blockchain comes down to a cost benefit analysis. The main advantage of using blockchain is its PCP guarantees, while its limitations include slower performance and weaker privacy capabilities (although these limitations are being eroded over time). In which applications are PCP guarantees actually valuable?
For many applications, using a server is the better option. PCP guarantees are mainly important in cases where a significant conflict of interest appears between the operators of software and its users (trustlessness solves this), or when there are concerns of a third party interfering with software (resiliency solves this).
Today, conflicts of interests are typically solved via government regulation. In fintech apps for example, rather than trusting software operators to uphold PCP, you rely on a government to ensure that the software operators adequately follow PCP.
As far as concerns of a third party interfering with software goes, today, applications solve this by relying on a government to defend servers and punish those who try to interfere.
So what’s left? What types of applications does it make sense to deploy on a blockchain? We’ll answer this question in a future post. Subscribe for updates!
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