One of the main hypotheses that led to the creation of Nervos Network, is that distributed ledgers, with their enormous power and immutability, should be used for the most valuable purposes — store of asset — rather than processing all transactions that take place on a network.This idea has informed the way we are building Nervos.
Blockchain’s fundamental innovation lies in its ability to store information, securely, immutably, transparently, forever. It allows multiple parties to view and/or verify information that is not subject to the jurisdiction of a central arbiter or gatekeeper. Despite this lack of a central authority, the information is secure and cannot be tampered with. Blockchain allows us to have trust with transparency. This has not been possible before.
It also underscores a broader, crucial fact about blockchain that not enough people recognize. Focus on on-chain transactions is the result of a basic misunderstanding — that blockchain represents an incremental, rather than a foundational, shift. It supposes that blockchain will step into existing frameworks and improve them, in the same way that 5G is an improvement over 4G — it amplifies performance, but maintains the same fundamental assumptions. In the case of blockchain, this is not true.
Blockchain is still a new technology. Like steam power or manned flight, it offers a new set of capabilities that have not existed before. Of course, unlike those technologies, blockchain opens possibilities in the realm of data, information, and record keeping, rather than physical movement. Nevertheless, it expands the realm of the possible in similar ways. And like those technologies, it promises a paradigm shift, which takes time.
Those that do succeed will do so by recognizing what blockchain is — a powerful tool for storing information. This also requires understanding what blockchain is not. The proofs required to verify information on a distributed ledger demand more time and computing power than ordinary computer networks. Bitcoin and Ethereum famously lag legacy systems by orders of magnitude when measured by transactions per second (TPS). Does this mean the blockchain community must put all of its efforts into increasing transaction speeds until they match those of Visa, for instance? In our view, that fundamentally misunderstands what blockchain is all about.
When we think of the most valuable materials in the world — or the most valuable products — we do not associate them with everyday tasks. We reserve these powerful tools for the greatest, heaviest, most important functions. The same applies to blockchain technology— it is a powerful, high-value tool that should be used to store and secure important, high-value assets. It is the foundation of a new framework. To see it as a new way to process transactions is to miss the forest for the trees.
Once we accept this fact, we can design networks that use blockchains accordingly, reserving them for the high-value functions to which they are suited and maintaining the philosophical germ of decentralized trust that drove their initial development. Everyday transactions can then take place on secondary layers designed to maximize speed and efficiency, leaving the truly valuable work to the foundational blockchain layer.