The definition of Blockchain continues to evolve as rapidly as the technology itself. It seems that every few months the Blockchain ecosystem redefines itself and with each iteration it becomes significantly more complex and difficult to track. Blockchain first entered the scene in the form of Bitcoin, a fairly straightforward cryptocurrency which enabled borderless, permission-less monetary transfers. Shortly following we saw alt-coins, Bitcoin Improvement Proposals (BIPS), Bitcoin Exchanges, provenance applications, remittance applications, Ethereum, and now Initial Currency Offereings (ICOs). A rapidly evolving ecosystem lends to a rapidly evolving definition of Blockchain. So what is the Blockchain?
The Blockchain is a decentralized, peer-to-peer monetary transfer network that provides connected peers access to a fungible currency native to the network. In modern times, a Blockchain carries the following characteristics:
A server-side peer-to-peer network which:
- Receives and verifies transactions.
- Verifies the transactions based on a set of business rules that are commonly agreed upon by server-side peers.
- Are incentivized to participate by the native currency of the network.
A client-side peer-to-peer network which:
- Provides access to the server-side peer-to-peer network in exchange for an amount of the native currency.
- Constructs transactions that conform to the commonly agreed upon business rules of the server-side peer-to-peer network.
- Has the ability to receive and relay transactions to the server-side peer-to-peer network
Based on the business rules enforced by the network, a unique set of incentives must exist in order to incentivize all involved parties to participate in the network. This set of incentives manifests in a set of n-dimensional supply and demand curves where n is the number of parties involved. The value of the native currency is reflected in the demand of the network or the number of client-side and server-side peers which choose to participate in the network at a given time. The server-side peers works to support the demand of the network, while the client-side peers pay the server-side with the native currency for use of the network. The supply is the total amount of currency which can exist in the network at a given time, typically a fixed value.
Although the Blockchain has yet to make an impact on existing business models, it continues to evolve and create new networks with unique incentives to participate. As we continue to anxiously await the intersection of the real-world and the blockchain, we must remain cognizant that its possible that it simply continue to perpetuate in the metaverse. Stay hungry. Stay foolish. Stay decentralized.