Blockchains and Sugarplum Fairies

Recently I’ve noticed a trend in the VC blogosphere and on twitter that makes casual assumptions on the power of blockchains that just are not true, at least not for free. This mostly relates to the distributed computing power that a blockchain architecture makes available. [Note: Feel free to tear this apart if I’m wildly off the mark here.]

A blockchain such as bitcoin or ethereum has a great deal of power to process the specific hash required to secure the blockchain by guessing solutions for the next block in the chain. It adds transactions to the blockchain history as part of this processing. However, it doesn’t do a good job of making use of that processing power for anything else other than basic network maintenance.

Further, only one of the many blockchain nodes discovers the solution and only the direct work of this node is theoretically not wasted in growing the blockchain. Only this winning node executes any smart contracts. I believe this holds true other than initial preparation of transactions with contracts before being sent to the blockchain.

If you want to take advantage of the distributed power of the P2P network, you basically have to build that separately from the default functions of the blockchain. This is doable but not necessarily easy or free. There has been work done in this area (sidechains, lightning network, etc) but it isn’t built in to blockchain tech just yet.

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