State of the Blockchain Industry
My Sunday Morning Rant
In a past tweet I complained about the resurgence of the doge coin joke
Frankly at least when it gets to dogecoin investors, like the GME ones, they know it’s nonsense so the “nonsenseness” is already priced (I hope) so people have no one to blame but themselves.
For the second star of early May 2021, Ethereum, things are less straightforward since unlike Doge, Ethereum is being developed by many smart people, researchers, enthusiasts, which dedicate their lives into making it a scalable product, and unlike Doge it is being used as a platform for many new projects.
Almost 4 years ago I predicated that Ethereum may never implement PoS, well it did eventually to some extent but evidently the PoS protocol used is a lame duck, and I stand by my prediction that Ethereum will always have to maintain some PoW elements to secure the network, and without PoS there is no scaling so back to square ETH1.
The key weakness I identify in the otherwise thriving Ethereum ecosystem is their excessive reliance on intrinsic applications such as decentralized exchanges, oracles and various financial instruments. At the end, there must be some utility token to justify all this party. Currently for every ETH based token with real utility (like BAT?) there are 100's based on Luft Gesheft clogging the network and making it mostly unusable.
The one coin I learned to trust, Bitcoin, is from a software engineering perspective, a dinosaur, Bitcoin is based on a 12 years old software that shows its age on every step. I consider Bitcoin to be the IBM mainframe of the blockchain industry, a rock solid product that is insanely expensive to buy and use because of its stability and trustworthiness. But would you invest in the future prospect of a legacy product? I’m not sure.
Then a nice article that caught my attention last week is the story of the Cardano based Ethupia project. First and foremost big chapeau for the Cardano marketing team for being able to insert news about such an absurd project plan into major publications. At least they ironically state “does not expect to launch the project before 2022”.
Why absurd you ask? Let’s me think out loud since I already analyzed the prospects of several such projects in the past seven years.
Let’s imagine a public blockchain project trying to track the performance of 5 million students. I assume upfront that the students themselves won’t have to transact on this blockchain since this means creating 5 million accounts protected by a private key and distributing ADA to all these accounts so that they can pay transaction fees. An insanely expensive logistical nightmare.
Therefore I assume that only the schools or academic institutes will submit transactions to this blockchain. How would they buy the ADA token they need in order to pay the fees for their transactions? How would they protect their private keys? How would they report their taxes? Who will cover the expenses of all this operation? How would this, not so important, activity affect the transaction fees of the whole ADA network?
What about the privacy of these poor students? I’m sure some of them won’t be happy to share their C grade in history with their parents let alone see their grade being submitted to a global ledger where it could be tracked by any block explorer forever.
Besides, we already agreed that the single blockchain single token model is obsolete so why even bother.
Enough rant for one day.