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WAX ON: The blockchain is the worst possible way to do just about anything. But...

Oct 31, 2019
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Blockchain? Terrible. Also, amazing.

Let me explain.

Basically, it’s a trade-off. Like pretty much every other kind of technology out there, blockchain has pros and cons.

Pros:

  • Decentralization. You don’t need anyone’s permission.
  • Immutability. The blockchain maintains a perfect picture of what’s happened in the past.

Great, right? However, “the very things that make blockchain technology so effective as a trust machine have a crippling effect on its commercial scalability... at least for now,” says WAX Co-founder William Quigley. And those are...

Cons:

  • Slow. Painfully so, but this will improve over time.
  • Difficult. It’s hard to scale to large volumes of transactions.

But this doesn’t mean we can’t use blockchains. In fact there are some things that blockchain tech does SO well that users of it can not only live with the cons, but still come out way ahead in spite of them (which William will discuss in a future video).

"Blockchain adds real value to digital assets that are used in a game," said Joel Comm, host of The Bad Crypto Podcast and blockchain industry influencer, weighing in on the pros. "There may only be 750 copies of some legendary dragon card, for example. When you own it, you actually own it. It's written on the blockchain. It's in your wallet, and if you want to trade it or sell it, you can do that. Trading digital collectibles is something blockchain can do that regular trading card games like Blizzard's Hearthstone can't."

“Blockchains give users rights to their data, allowing them to give access, and even monetize it in verifiable ways that have never been possible before,” says Crypt0 News.

Video transcript:

I'm going to start today with two strongly held opinions. First, a blockchain is the worst possible way to do just about anything. And second, I'm a big believer in blockchain technology. Now you're probably thinking, well, aren't those two statements contradictory? I know it seems that way, but let me explain.

We first have to remember what a blockchain really is. It's a database, not that mysterious. But it's a database with a few special properties. And what are those properties? Anyone can add information to a blockchain, like creating a personal account, provided you follow the rules that govern that blockchain.

In other words, you don't need anyone's permission. The authority to write to the blockchain database is open. It's not centrally controlled. This is what we mean by the term “decentralized,” and no one can add or change this information once it's been stored in the blockchain. When information is written into a block that forms the basis for a blockchain, it's locked, you can't modify it.

Personally, I think this feature - the immutability of blockchain records - is what makes blockchain technology almost magical. It's an uneditable database that anyone can use, yet it always maintains a perfect snapshot of what happened in the past. A perfect picture of say, who owns all the world's Bitcoin at any given moment.

Now you might be asking yourself with all these amazing qualities, why do I think that a blockchain is the worst possible way to do just about anything? That's because I haven't explained the Achilles heel of blockchain, the crippling drawbacks of doing something on a blockchain that are so monumental, they render the blockchain technology impractical in most cases. So those two drawbacks are the fact that blockchain technology is painfully slow, and it's very difficult to scale to large volumes of transactions.

You see the very things that make blockchain technology so effective as a trust machine have a crippling effect on its commercial scalability, at least for now.

Now that doesn't mean we can't use blockchains today, but like all technologies, there are trade-offs. So what are the things that a blockchain does really well? So well that we can live with the big shortcomings that come with it, and yet still come out way ahead?

In my next video, I'm going to discuss just that: the five known use cases where a blockchain has no equal in the world.

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