“Marty, what are we going to do with that much power!?”
The first two industrial grade block chain platforms made the jump to light speed about six months ago. Their 100 transactions per second throughput are scalable to 100,000 and their 3-second block times can be dialed to 1 second by public vote. What are we going to do with that much power?
Foolish mortal! Bitcoin gets along quite nicely with 10 minute block times and 7 transactions per second peak throughput. Frankly, that much power seems to be complete overkill. After all, “640K of RAM ought to be enough for anybody!”Well, let’s do a little blues riff in “B” on that question!
First, I’d better define some terms:
What is a blockchain platform? It’s an incorruptible peer-to-peer ledger on which to build cryptocurrencies and other applications. Most decentralized applications develop or clone their own dedicated platforms, but we now see intense competition to offer multi-application block chain platforms. These act like operating systems to provide common services to applications developed by others.
What is a “real time” blockchain? Simply put, it is a peer-to-peer ledger whose transaction times are only limited by the speed of light and the dimensions of the planet. Its benefit is real-time performance, the ability to keep up with live events and react to them in time to influence their outcomes.
Real time for global day trading must react in about 1 second, roughly the same as an aircraft carrier rudder. Other applications range from sports betting to live action video games.
• Light speed chains can produce a new block in the time it takes to deal a playing card or for each slot machine tumbler to “clunk” into place.
• One chain can process
all transactions for all of the 600-plus coins now listed on coinmarketcap.com – with enough left over for Master Card or VISA.
• The cost savings for Bitcoin alone could provide a $3 million grant to each of 100 new crypto-startups – or fund 30 Bitcoin Super Bowl ads. Every year.
But the most important advantage of a blockchain fast enough to support many independent businesses is that you enter a frictionless economic environment where currencies, applications, smart contracts and entire enterprises can do business with greater liquidity, efficiency, market depth, network effect, and regulatory freedom.
Keeping all of the transactions with your application on the same blockchain means never having to encounter the regulatory and security hazards of passing through corruptible and fallible human institutions. That’s an ideal worth pursuing! .
And it’s a jump that almost
any coin, exchange or decentralized application in the cryptocurrency industry could choose to make. All they need is an ordinary software upgrade.
Now that such platforms are becoming available,
Let’s look at the case for moving onto one of them.
In the cryptocurrency world it has long been considered kosher to clone somebody else’s open source platform when introducing a new coin. It’s also OK to upgrade your own platform from time to time. But it is much less common to see coins hopping from platform to platform as the technology advances. Why is that?
One obvious reason is that some coins exist for the explicit purpose of advocating a particular platform technology. Bitcoin, Litecoin, Ripple, and Peercoin come to mind as early examples. Their
raison d'être was originally to advance a certain technology.
Of course they are not going to jump to a better platform. That would be conceding defeat.
Or would it? Do we really believe that 100 years from now any of those coins will still be using the same platform technology? What about in ten years? If not, then why not upgrade next week? To the extent that each of these enterprises has built up an ecosystem of users and supporters that are now
more valuable than their original base technology, do they even need to keep their first prototype’s technology alive forever?
Well some will. And risk going the way of the dinosaur. Others will adapt and leverage what really matters – their brand and user base – and go on to achieve great things! Right now the Darwinian forces have never been stronger. Transaction cost-effectiveness varies by
ten orders of magnitude between the strongest platforms and today’s industry average. Transaction times range from 10 minutes to 1 second. Bandwidth varies from 7 transactions per second to 100,000. The industry spends over $300,000,000 on transaction processing when it could be less than $250,000. Combined, that’s transaction cost-effectiveness range of 1 to 10,000,000,000. That’s a pretty good incentive to jump!
The difference between jogging and flying at the speed of light
is only eight orders of magnitude.
There are many validations of the surprisingly elusive idea that
it’s ok to jump to a new platform. Stellar started as a Ripple clone, developed its own platform and then jumped to it. NXT rolled its own version of Peercoin’s POS. Ethereum is starting on a POW platform with a pre-planned jump to POS or even DPOS. BitShares started as a POW surrogate called ProtoShares and has since jumped to DPOS and now to Graphene. BanxShares is jumping from POS to Graphene. Muse is jumping to Graphene. Most of the leading teams are getting jumpy!
Early coins were synonymous with the platforms they were built upon. Some coins only came into existence because they were trying to offer a better platform. Most altcoins simply cloned an existing platform and focused on their real mission:
Attract a new demographic community to a brand
based on a common philosophy, technology, developer, or meme.
Most such coins are imminently upgradable to better technology without losing what really matters – the brand and community that grew up around them.
Coins like Dogecoin ought to be leading this immanent megatrend. It is ideally situated as a “platform surfer”. The reasons its community loves it have little to do with the platform on which it resides. It ought to always be able to claim the very best technology and the most cost-effective performance because it has no particular technical axe to grind.
The only barrier is inertia.
And before our very eyes, that inertia is evaporating. As soon as the bulk of the world’s cryptocurrency communities realize that
it’s easy and ok to change platforms, Katie bar the door! Everybody will be looking to use a platform upgrade as an easy way to move up the totem pole at coinmarketcap.com (or avoid being passed by others).
On many platforms you can launch a new coin in less than one hour and immediately have it listed on multiple exchanges
with a rich set of on and off ramps already in place for you. And you don’t have to be a new coin. Any coin can upgrade. Instead of publishing the next incremental version of its existing software, it does a “pitch fork” (Pitch the old software while initializing same accounts and asset ownership on the new platform). Users switch wallets and voilà! Nothing else about the coin’s distinctive community or ownership structure needs to change, including its representation on coinmarketcap.com.
Even so, why should established applications bother to make the jump?
Given the Darwinian imperative of remaining competitive, applications should always be evaluating their choice of platform. Some of the top considerations are cost-effectiveness (a function of speed, bandwidth, operating costs), network effect (the number of users a platform has) and reduced economic friction (the ease of doing business with other players). Here, I’d like to focus on
Larimer’s Fifth Blinding Flash of the Obvious:
Erecting a separate platform for each new asset
is like isolating your business on its own deserted island.
Its better to be co-located in a “big city” economy
where you can share services, infrastructure and market depth.
Of course, if your business is popular and unique enough, it may be worthwhile for people to fly out to your island to interact with you. But that’s still
unnecessary economic friction. Moving your customer’s funds between exchanges or blockchains is like flying between islands. The associated delays, costs and limited local interactions inhibit what opportunities you can profitably pursue. This is the same reason car dealers, restaurants, and high-tech firms tend to cluster together with their competitors and suppliers to attract customers. Reduced economic friction.
Choosing a crypto platform is like
choosing the city (or island) that will best support your business.
Ethereum offers an environment that will attract developers to populate its ecosystem with innovative applications. It might be viewed as the Silicon Valley of blockchain ecosystems. BitShares aims to be New York City, where transactions take place at New York economic speeds. Muse, a platform supporting custom coins for every artist, athlete, and political celebrity, offers an ecosystem more like Hollywood.
Choosing your ideal economic platform.
So we are looking for platforms that are
designed to be general-purpose ecosystems that support frictionless economic interactions between many complementary and competing players. Early platforms only needed to support the needs of a single currency. There was no thought given to
facilitating efficient interactions with other products and services. Most coins relied on external privately owned exchanges for that purpose. But proprietary stovepipe exchanges are themselves islands, with their own barriers to getting between them and their own internal regulatory and security friction.
The best economic platforms, whether cities or block chains, are designed to minimize this friction. They are “superconductors” reducing economic resistance for transactions of every kind. They provide instant access to common services and infrastructure that can take years to build out on your own island. They provide instant teaming with other service providers without having to negotiate individual deals. Each new arrival enriches the set of services and products available for everyone else to build on.
Blockchain based platforms designed to do the accounting ledgers for many assets and applications at the same time can be thought of as many chains woven together into one compound chain. Counterparty-free atomic cross-application trading is built in! Smart contracts between member “chains” are completely frictionless.
It works the same for traditional exchanges as it does for individual assets.
For example, the OpenLedger™ Network (OpenLedger.info) allows multiple traditional exchanges to share the same transparent order books on the BitShares Platform. This gives them access to deeper, more liquid markets and access to more financial products and services than they could enjoy in a stovepipe by themselves. And they get built-in accounting that captures the revenue from every customer they bring to the table. It also puts an end to the bane of our industry - exchanges getting hacked. This is because customers retain the keys to their own funds even while they are on the exchange! Multi-signature keys are configurable for any corporate or personal access control strategy.
Joining a common blockchain-based network is a great way for new exchanges to reach critical mass together – by sharing market depth and liquidity drawn from completely different demographics or their own pre-existing user bases. Startups in eight countries have publicly or privately indicated plans to join when this network goes live this month.
“My application doesn’t need that much speed or bandwidth.”
That’s like saying my individual car doesn’t need the bandwidth of a six-lane beltway to get around well in a big city. You do if you want to share that resource with a lot of other people – which is the whole point of moving to the Big City in the first place.
You also want to be on a fast platform so that
a lot of other applications can join you there. In particular, so that applications that
do need speed can thrive while serving you. A good example is day traders. They need the fastest possible trading times so they can exploit their specialized knowledge and tools. They will gravitate to the fastest platforms and, in turn, will generate the liquidity, market depth and specialized services that your application probably does need.
Speed is only one reason to upgrade.
Each platform will give your application a wealth of new features for free. I won’t attempt to represent them all, but here’s a sampling of the ones you can read about at BitShares.org. Each platform will have its own set of features you can inherit to make your own project more successful.
Price Stable Cryptocurrencies – SmartCoins
Decentralized Asset Exchange
Choice of Public or Private Transactions
Recurring and Scheduled Payments
Referral Rewards Program
Dynamic Account Permissions
Transferrable Named Accounts
Stakeholder Approved Project Funding
Reasons why you might still need a separate platform.Of course, there are some things that might not go together on the same chain due to differences in rate structure, by-laws, governance or philosophy. We still need diversity! And besides, New York City traders might not feel comfortable on the same platform with a Caribbean gaming business. To each his own!
While it is best to keep assets with compatible business models on the same chain wherever possible, Cryptonomex.com has and will release multilple independent chains based on its rapidly advancing technology for these very reasons.
BitShares upgraded to Graphene technology to provide a real-time decentralized exchange platform supporting a network of traditional exchanges that have agreed to share their order books, products, and services on an open public ledger for improved security, transparency, and combined network effect.
MUSE is a Graphene based platform developed by Cryptonomex for PeerTracks which serves as a real-time platform for every artist, athlete, politician, and other celebrity to issue their own interoperable coins. It needs a different micro-transaction fee structure than a network intended to support high-value financial transactions.
Identabit is a Graphene based platform developed for
Identabit.com that emphasizes a unique mix of positive identity, regulatory compliance, government accountability and banking privacy targeting the remittance industry. It can’t co-exist with BitShares’ dogged insistence on anonymous transactions as a philosophical, nay existential, necessity.
Some alternative platforms might be too complex to make the jump to light speed, but that doesn’t mean synergies won’t exist. Many smart contracts will probably appear first on Ethereum because of its flexible prototyping environment. But what developer of a profitable Ethereum smart contract application will fail to quickly optimize a matching light speed version on BitShares before some cheeky competitor does it for her?
The Bottom Line.Developers should consider a number of new platforms that can accelerate their time to market for new or existing coins, applications, and decentralized autonomous currencies/companies/cooperatives/communities/countries (DACs). It can take a lot of work to get (or keep) traction on your own isolated platform. That’s so 2012. Don’t do it, unless you have a compelling reason.
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