With so many scams and scammers looking to make a quick buck and so many uneducated and underinformed investors out there for a quick buck, the lines between good technology and get rich quick schemes begin to erode real fast. So what makes a blockchain a blockchain?
This week we'll analyze and define the term blockchain and then consider some key elements that are vital in the creation of useful technology regardless of what said project advertises. There are a lot of blockchain projects that contain a bunch of empty promises and lackluster technology that isn't "worthy" of being called a legitimate blockchain project.
Although these arguments may be only semantic. One may argue that a shitty blockchain is still a blockchain. But understanding the importance of language and the context it is used is important when beginning to educate people about the technology and getting them educated against the sharks out for blood in the space.
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According to Investopedia, a blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions where blocks are added in chronological order that allows participants to keep of records without central bookkeeping.
While nearly all projects are digitized and public, decentralized is often the topic of a lot of debates. And for good reason. The security of the blockchain is heavily dependent on how decentralized a blockchain is. If a few entities control enough of certain coins, these parties can collude and rewrite the history.
And what's wrong with rewriting the history? Well you now have the ability to double spend and alter other transactions as you please. There is now a central bookkeeper with a very inefficient database. This blockchain falls apart because a small group of people are able to determine what counts as legitimate and what doesn't count at all. Trust is required. Which is how things currently work. This type of technology isn't useful beyond being a speculative tool.
So decentralization is important, but so many blockchain have pro-allocated amounts to founders and developers. They essentially cripple their security before they even roll out the chain they create. Sure, if you trust these people with your money then nothing is wrong, but that additional layer of trust undermines the technological advance that blockchain is.
However, it is very hard to define clear boundaries on what counts as decentralized and what doesn't count as decentralized and due to this fuzziness there is a lot of disagreement on how well distributed these chains should be.
But even if we can't draw a line, we know that some boundary exists. Blockchains shouldn't be able to shut down and restarted and rules can't be changed without reached consensus. Whatever that consensus may be. Honestly, there are too many vague and unclear definitions that turn such arguments into linguistic and semantic fights that are kind of pointless.
Also even if a coin is decentralized initially, that doesn't mean a blockchain can't dissolve into something worse given poorly written rules or exploitable mechanisms. People will argue that ASICs exploit the Proof-of-Work mechanism in several older blockchains including Bitcoin. But there are also examples in newer coins.
Take EOS for example. Written into their constitution, coins can be taken away from inactive accounts. That undermines the blockchain completely. While the Bitcoin example raises questions of centralization and the fuzzy lines that we mentioned earlier, this defeats the whole point of a public ledger. From that angle, completely independent of centralization, you could argue that EOS isn't a blockchain. But I'm sure you could just as easily argue that it is.
But maybe we stop here. This topic is kind of confusing and probably easily devolves into pointless arguments and fights over whose coin is better than the other. Perhaps we should take a different perspective. Where we evaluate a token based on its utility in light of its pros and cons. Just something to consider.