A discussion of why so many different distributed ledger technologies exist today, and what makes them different from one another. It is non-technical but assumes some familiarity with blockchain and cryptocurrency concepts. Think "Blockchain 201".
Originally presented to the Orlando Blockchain in Business Meetup on 12/10/18. Contact Chuck Bair on LinkedIn to schedule a live presentation of this material or other blockchain-related topics.
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Distributed Ledger Technologies; What's up with all these blockchains?
1. Distributed
Ledger Technologies
What’s up with all these different blockchains?
For the Orlando Blockchain Technology and Business Meetup
Presented by Chuck Bair, Partner
Focus will be on capabilities from a business value perspective rather than on how things work.
Caveat: terminology can be contentious in this space. My take is that standards have not really been established yet, but I’ve done my best to use what I consider the most common terms.
Note: DLTs are often referred to as “blockchains” or “blockchain technology”. The terms are roughly synonymous – a blockchain is the structure in which a digital ledger of transactions is maintained.
Cover other definitions like “protocol” and “framework” here?
We’ll have a look at these from the business capability perspective, rather than a technical one.
When I started following crypto in~2014, the main users were a den of thieves – and that got me convinced…
Silk Road story?
(But the ledger won’t tell you who owns the addresses involved – you would need to find that out elsewhere.)
Some early offshoots were just focused on making a better or different cryptocurrency.
Ethereum was the first broadly used smart contract platform…
This won’t get very technical. We’re going to focus on what these features mean from a business value perspective.
That will help everyone understand what makes DLTs different from one another and the reasons behind their designs.
This is not an exhaustive list, but it hits some of the most important concepts. In reality, the possible variations are infinite.
This is where the original tinkering was done, and many of those early alternative blockchains were simply attempts to make a better or differentiated cryptocurrency versus Bitcoin.
BTC targets 10 min, LTC ~2.5 min, Eth targets 10-19 seconds (with much smaller blocks)
This may not seem critically important now, but capacity design may determine which DLTs are able to scale up to mainstream use. Non-functional capacity systems may leave a blockchain open to denial of service attack and might alos allow it to be overwhelmed with legitimate transactions. That is particularly a ris if use increases quickly and dramatically before the development team supporting the DLT can respond with code changes..
Note that Bitcoin can more or less support smart contracts, but it’s not easy and not robust.
More complex solutions built with smart contracts are commonly called distributed apps or dApps
Generally created using smart contracts (but not always)
Ethereum ERC-20 was the de-facto standard in the 2017 ICO rush.
Many newer DLTs are meant to be superior alternatives to Ethereum for SCs and tokens as well
Bitcoin allowed access to anyone who could set up a wallet, and all transactions were viewable – the only privacy comes in the form of hiding ownership.
Note privileged Dapps can potentially live on public blockchains via smart contract authentication controls
Discuss: what factors of a project would drive these decisions?
That risk could be less critical in DLTs built for a controlled set of trusted users.
Ethereum “Casper” project seeks to migrate from PoW to PoS (I don’t know of any other DLC that has made a change like that.). Cardano considering a similar change.
Hybrid optios exist – like Dash Masternodes that stake to support anonymity but with blocks created via PoW
Leanest option in terms of power and complexity, but only works when node operators recognize the value of being included in the network