Crypto values by first principles approach
“Blockchain lacks real-world use case”, this statement is becoming more famous day by day. Creators and entrepreneurs from non-engineering backgrounds find it hard to understand the utilities that blockchains provide. Failing to understand these values results in the expendable involvement of this technology in an app. Keeping this in mind, this blog is an attempt to lay down the unique value propositions provided by blockchains while treating them as a black box.
Community
Blockchain technology starts with and revolves around communities: from deciding what is the truth (miners) to working out the market value (users), communities fuel the blockchains and the apps built on top of them. To give some context, communities can be a group of ordinary people, people with rare skills, people with a common ambition, or people with any other common element that unites them. The health of the project is usually correlated with the temperament of the community. For instance, a community with staunch members supporting the project shall survive the ups and downs of the financial market. In order to achieve this, strong communication among participants becomes evident. These days, this is carried out on platforms such as Twitter and Discord. Another requirement is to have all the routine tasks of the community executed in a transparent manner. Lastly, entry to such a community should be permissionless or at least checked by the community members, and a self-sustainable protocol should maintain “fairness” among potentially trustless participants. The last requirement is the missing piece of the puzzle that blockchains solve to have a self-sustainable community.
Therefore, an ideal blockchain use case shall have a substantial component dedicated to building its community. As we will see next, the other values of blockchain complement a sustainable community.
Trustlessness
From a technological point of view, one of the most significant features of blockchain is to achieve consensus amongst trustless participants. This further gives rise to the following features:
- Availability: this ensures that the data posted on the blockchain is held by some computer in some part of the world.
- Immutability: with almost 1 probability, the historical data posted on the blockchain does not change.
- Automation: one can generate an arbitrary script and post it on smart-contract blockchains such as Ethereum. These scripts are guaranteed to execute correctly whenever triggered with inputs and sufficient fees.
A key point to note is that all the above features can be achieved by having a trusted and centralized entity. However, the inclusion of a powerful centralized entity on a platform can challenge an inclusive and fair community. This is where one needs to decide whether blockchain fits their requirements or not.
Inclusiveness
As mentioned before, blockchain technology can be used to power fair communities. Depending on the level of inclusiveness of the communities, they can be permissioned by a few authorities, partially inclusive with some conditions to join, and fully inclusive allowing anyone to join. Since blockchain allows communities to reach a consensus in a trustless manner, the communities as a whole can also decide who to let in and how to distribute and delegate power within the community. Therefore, based on the requirement of the protocol that one is designing, one can choose the level of inclusiveness that they want in the community and use blockchains to implement this fair gateway to the community.
To summarize, blockchains provide novelty in building protocols and the communities around them. By providing a way to reach a consensus among trustless participants, blockchain is the defacto tool to deal with anonymous participants from around the globe. I hope this perspective helps entrepreneurs and builders to come up with novel and meaningful use cases of blockchain technology.
