Analysing Costs & Benefits of Public Blockchains (with Data!)

  1. Distributed Ledgers, Blockchains, and Cryptocurrencies are still experiments;
  2. Decentralisation is relatively expensive (because it relies on redundancy of data and computing, and also because the latency of sending messages over large networks does not benefit from a phenoma similar to Moore’s Law), and;
  3. Economics will eventually catch-up with the hype and inflated expectations around these technologies.
  1. Distributed Ledger — A record of ownership, which multiple parties (entities) use through a common peer-to-peer network, and is stored across multiple locations;
  2. Distributed Ledger Technology (DLT) — The set of protocols that defines the above;
  3. Blockchains — A subset of Distributed Ledgers in which all parties are privy to all transactions which are confirmed on the ledger, and in which transactions are grouped and stored in blocks that are linked to one another in sequential order,
  4. Public Blockchains — A blockchain that does not contain formalised requirements which prohibit any potential participant from adding/creating blocks, or accessing the data and peer-to-peer network of its blockchain (i.e. permissionless). Note: A participant must still meet the requirements of the network consensus rules in order to add (mine/mint) a block, which may be practically beyond the capabilities of many potential participants,
  5. Cryptocurrency — A native unit of account within a public blockchain, which is used to incentivise the running and security of its blockchain, and;
  6. Tokens — Non native assets or coins held within a public blockchain, which cannot be used to compensate entities who run and secure the blockchain (i.e. ICO tokens).
  1. The cost to maintain and secure a blockchain has a direct, and positive correlation with the ability of a network to secure against real or perceived censorship, and;
  2. Economically rational uses for public blockchain technology will be confined to instances where the real or perceived threat of censorship by external actors justifies the transactional cost required to maintain and secure a blockchain.
  1. native units of account are necessary to ensure that validators are properly incentivised which allows us to have an assumption of “immutability” in such systems,
  2. “inflation” is an important variable in properly incentivising these systems, and
  3. The “assumption of immutability” is probabilistic, and is not fixed over time.
  • 5 million transactions per month (~7k per hour), which get confirmed into
  • 4,320 batches per month (blocks) stored into the standard storage mechanism
  • And we get 100 million queries to our database per month (people checking their balance)
  • All the 165 GB of older blocks getting stored into the infrequent access storage
  • And another 1 million queries per month to the older transactions

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Et c’est une folie à nulle autre seconde — De vouloir se mêler de corriger le monde. PTK.

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Colin Platt

Colin Platt

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Et c’est une folie à nulle autre seconde — De vouloir se mêler de corriger le monde. PTK.