People tend to have very strong opinions about digital assets and their use cases . For example, many critics believe these assets have no intrinsic value and consequently will go to zero. Unfortunately, these critics pay little or no attention to developer activity. Developers are constantly improving and adding new features to their respective crypto projects. The cumulative effect of each iteration is a blockchain ecosystem with unique properties and characteristics.
Gold bugs often contend the superiority of precious metals is a result of their tangibility and real world utility. However, they fail to realize the use cases materialized from their intrinsic properties. Given the properties of gold, we collectively determined it to be a reliable medium for value transfer and storage. Comparatively, I believe the same will apply to blockchain based digital assets. Developers and the community will collectively decide on which blockchain to adopt for a particular use case.
Golden Road to Sound Money
To clearly understand how use cases led to adoption in the digital blockchain space, let’s quickly review golds road to adoption as sound money. In the prehistoric era, humans primarily bartered as means of value exchange. Barter typically involved individuals having surplus value (cattle, crops). The surplus value would be directly exchanged for something deemed to have equal or greater value (clay pot, tool). Next came various attempts at creating a uniform unit of account. For instance, the Zhou Dynasty in China used small knives and spades, sea shells were used Africa, and tobacco in colonial Virginia. One of the big problems with these methods was controlling the overall circulating supply. Through discovery or overproduction the “currency” could easily be inflated. However, these failed attempt had not been in vain. The failures helped determine the necessary properties for sound money.
Golds emergence as money wasn’t an accident. Before usurping the role of money, gold was culturally pervasive and geographically dispersed around the globe. Below are the reasons behind golds ascent to ubiquity:
- First metal widely known to our species.
- Found in a pure and workable state, making it easier to work with.
- First use case was ornamental in part due to its permanence.
- Associated with royalty, deities, immortality, and wealth.
Golds popularity and intrinsic properties eventually cemented its role as global money.
In distinction, digital assets and their respective blockchains acquire characteristics through software development. Initially, these blockchains are developed with a use case in mind, however second layer developers have to choose a blockchain based ecosystem to build on. During this stage developers will have select a blockchain based on its unique properties. Here’s a small list of intrinsic and extrinsic attributes they may consider in the selection process:
Each blockchain based ecosystem has the attributes listed above in varying degrees. Developers must do their due diligence in determining the optimal blockchain to build on. To illustrate, let’s assume a team is building an app to empower user authentication. The following considerations should be made:
- scalability ~ must be able to accommodate millions of transactions
- decentralized~ code must be open source and accessible to everyone
- Transaction cost ~ must cost next to nothing
- regulation ~ should be acceptable in target jurisdiction
- accessibility ~ listed on multiple platforms and exchanges, mobile wallet support for ios and android
- community ~ strong and robust community to help raise awareness
By selecting an ecosystem with the desired properties a developer team can leverage blockchain technology to build next generation applications.
Just as we found a use for gold after its discovery, I believe the same will happen for open source blockchain based protocols. Developers will create platforms on blockchains which compliment their product needs. As they build and scale, more needs are likely to arise. To solve this, I believe many protocols will become interoperable enabling cross chain interactions. I firmly believe the next web iteration “web 3.0” will be a mesh of interactive protocols.