The world of blockchain is rapidly evolving, and there are many people and startups with innovative ideas to bring blockchain technology into our everyday lives. One aspect of the early days of blockchain and cryptocurrency is that there was a high technological barrier to entry. If you weren’t savvy enough to navigate the web, set up a crypto wallet, and purchase Bitcoin on the available exchanges, you were simply out of luck.
Now many solutions are entering the marketplace that make it easier than ever for regular folk to buy and own Bitcoin, along with a multitude of other cryptocurrencies. This is also creating a network effect that is playing into Metcalfe’s Law and creating more value the bigger the blockchain network gets.
Again, in the early days, if you wanted to use Bitcoin or other crypto to make purchases or transactions, you needed the other party to recognize and accept cryptocurrency as a form of exchange. With a small fraction of the world using blockchain technology, that meant Bitcoin didn’t have much value for daily transactions.
However, as the cryptocurrency community gained massive adoption throughout last year and into the new year, the network effect is sweeping through the blockchain sector and building momentum. There are now more cryptocurrencies users than ever, a wide variety of companies accepting cryptocurrency payments, and as the market slowly recovers, people are jumping back on the blockchain bandwagon.
AION’s blockchain solution is positioned to help the network effect continue and accelerate by linking together all public and private blockchains. Some in the crypto community are calling it the ‘Cisco’ of blockchain. In this guide, we’ll examine what AION’s blockchain brings to the table, and if they have the potential to make a significant impact on the crypto markets.
What is the Network Effect?
The network effect according to Metcalfe’s Law is simply that the value of the network grows as the network of users gets bigger. In other words, networks can be seen as self-fulfilling prophecies.
For example, Uber’s network has no value if there is only one driver or rider on the network. However, with millions of users - drivers and passengers - the Uber platform has incredible value. Now you have a network of users that can request and provide rides.
And that value only goes up the more drivers and passengers sign up and join the network. As more people join the network, it attracts more users, and the network keeps growing naturally.
Facebook is another example of the network effect in action. Plenty of older folk swore off Facebook when it first started. But now there are swarms of Baby Boomers on Facebook because that’s where all of their friends are interacting online.
The network effect and Metcalfe’s Law have caused companies like Uber and Facebook to be worth billions and billions of dollars, while also having hundreds of millions of users. This is how Cisco became essential to the dot-com boom in the late 1990s and early 2000s, by allowing various networks and services to communicate with each other and share information across users.
At the peak of the boom in 2000, Cisco was worth roughly 10% of the internet sector’s entire market value by harnessing the powerful impact of the network effect. And that’s where AION finds itself today, at the cusp of creating a network effect among the blockchain sector.
The ‘Cisco’ of blockchain
Many of the blockchains today are running into similar problems of early online bulletin boards: they all lack compatibility with each other. The crypto community refers to this as an issue with interoperability. For example, if you have transactions or data stored on Ethereum’s blockchain, you aren’t able to move it over to the Stellar or NEO blockchain.
Cisco’s routers helped solve this problem for the internet’s early days. TCP/IP (Transmission Control Protocol / Internet Protocol) is a uniform language that was introduced to link different web pages and services together so users could seamlessly move from one to the other. Now you see this in action when you click on a result link from your Google search.
These computer language protocols send internet traffic through routers, and generally adhere to Cisco’s router rules, to deliver the internet request to any connected device. This enables users to access services like Facebook, Uber, and Google uniformly even though they use different computer systems. AION is aiming to do the same with blockchain.
Creating the Blockchain Bridge
To create the system of communication and interoperability between different blockchains, AION brings two vital elements to the table: Interchain transaction protocol (ICT) and bridges.
Interchain transaction protocol is the unifying language for blockchains to be able to talk with each other. The idea is similar to TCP/IP in that it governs and standardizes how blockchain information is sent and communicated over the internet.
The bridge is a connection that links the AION blockchain with another blockchain. Users in the AION network help create these needed bridges by staking or committing a certain number of AION tokens. So essentially by holding a predetermined amount of AION tokens, users on the network can participate as a blockchain bridge and collect fees from traffic that goes across their established bridge.
The AION network allows anyone to create blockchain bridges, which will drive users to the most popular blockchains to collect the highest potential fees possible. However, once competition sets in, fees will smooth out across blockchains as market forces take effect.
There is also a Proof-of-Work aspect as well to support the network’s validators and build trust in the network. For a transaction to be considered valid and cross the blockchain bridge, 75% of the validators must confirm the transaction. Validators are also required to stake a certain amount of AION tokens to qualify. Thus any bad actors risk losing their staked tokens and status as a validator.
AION’s core team
AION looks poised to deliver the network effect because they boast a robust team with strong crypto ties. The project’s leader is Matt Spoke, who began his career in blockchain as an adviser to blockchain companies in January 2015 at Deloitte.
From there, he launched his own blockchain development company Nuco, where he focused on building blockchain solutions and applications for large enterprises. However, as he progressed, Matt quickly realized that the blockchain applications he was building with Nuco would have a limited impact without the required interoperability. He switched gears and turned his attention towards fixing the issues with blockchain interoperability, leading to the AION project.
Matt is also a founding member of the Ethereum Alliance and has brought leading crypto influencer and Ethereum founder Vitalik Buterin on as an adviser to Nuco.
The AION team has a dozen developers and a couple of dozen other team members bringing this blockchain solution to life. Notable advisers on the AION project include:
- Anthony Di Iorio - Co-founder of Ethereum & CEO of Jaxx
- Michael Terpin - Founder of Market Wire & Transform Group
- John Lee - Managing Director at TMX Group
Final thoughts
AION is well positioned to take advantage of the next wave and trend in the blockchain sector. There are many new blockchain startups and Initial Coin Offerings (ICO) that are serving up new solutions to key problems. However, the practicality of those solutions is currently very low until there is an easy, convenient way to use blockchain technology.
We ran into the same issues when the internet was starting to take off. Cisco broke through with a solution connecting all of the various web services through a unified language and protocol, and a system that linked them together across users.
The opportunity exists to do the same in the blockchain sector. Several projects are looking to provide the best solution to the market. But AION seems poised with a strong team and excellent position to take the next step and become the bridge for blockchain.
Article was brought to you by the crypto dice game on MintDice. Originally posted on MintDice.com.