As I wrote in my article “Understanding The Gold Rush of Scalable and Validated Data powered by Blockchain and Decentralized AI”:
Decentralized Data will be the next step in terms of values empowered by the Blockchain Technology based on the Trustless core of it.
Why Blockchain is Meaningless
Blockchain technology and decentralization, in general, is a new technology not ready for mass adoption, but at the same time, a definite trend for the next decade.
As a new technology, who understand the vision and the real values of this technology in a pragmatic way will dominate the market in the next decade.
Unfortunately, what is happening with the Buzzword Blockchain is a huge misunderstanding about the true values and features that make this technology usable and safe. The blockchain is only a DB structure and trusts it without other features that create values in Blockchains Networks like Bitcoin, Ethereum is massively dangerous.
The blockchain is not the feature that creates security in terms of hacking and values in terms of currencies or decentralized data, but it’s only a buzzword to express a distributed database without the delete function and organized in blocks of transactions.
Blockchain technology is designed to store pieces of information inside blocks, not as a killer apps but as a layer to empower trustless features that really matter and create values in this ecosystem.
For example in networks like Bitcoin or Ethereum, are their Trustless features that create security and values, blockchain is only the DB structure to organize their ledger.
Why Trustless is everything
The concept of Trusteless is what create values in a Blockchain network, the idea to validate transactions and logic by an algorithm without trusting entities.
To reach this goal and develop the state of the art in a Blockchain Network, rather than a Blockchain DB structure there are three features that are critical to exclude entities and reach a Trustless Validation:
- Anonymous validators
Validators are who put the computational power, maintain the distributed ledger and validate the security of blocks. In a trustless network, validators are anonymous and more validators a network have, more the computational power is shared, more the network is good.
If you create a network with selected validators or one validator, this is not a trestles network, because you trust entities rather than an algorithm.
- The Consensus
The Proof is the algorithm that validators (or miners) use to validate blocks, these algorithms are designed to guarantee as much as they can the decentralized power of validators to be sure that a validator couldn’t manipulate the ledger or a single transaction, using economic disincentives.
- A Decentralized Governance
Valuable Blockchain Networks are Decentralized in decision making events and updates, and this is another hidden value to reach the Trustless Validation.
In technology upgrades are critical especially in a blockchain network, and if a network is centralized in how is built and how to be upgraded, this could make other features unuseful, because if an entity could decide how to update the network he actually rule the network and if a Decentralized Application runs into this kind of Network is trusting the Entity rather than a Trustless validation.
Anonymous Validators, the Consensus Algorithm, and a Decentralized Governance are the features that create Trustless in a Blockchain network and without one of this three aspects, a Network is only a hackable, not valuable and expensive architecture, in terms of network costs, developers costs and security.
Why Trust entities in the Blockchain world is dangerous
Private or Federated Blockchains are dangerous in therms of security, because you trust other entities in the network or hackers can corrupt it, for example in this case, less validator the network have, more is hackable.
In therms of values Private or Federate blockchains are useless because everything you validate is validated trusting entities, so it doesn’t makes sense if you want to add values on your data, in this case for example your data have the same values that the data in a regular cloud based web app.
A classic APIs based network is more scalable, cheeper and more secure than Private Blockchains.
Blockchain Projects like Ethereum or AION are working to scale the network using the concept of Hybrid Private Blockchain, for example when Ethereum will release Plasma, you can create a Private Blockchain using a simple Smart Contract, controlled in terms of security from the public one, but we didn’t know already if this system will work as well. AION is working on decentralized interoperability from private Blockchains to Public Blockchains but is a working project as well as Plasma, so maybe in the future Private Blockchains could make sense, but not today.
Other projects like EOS are working to scale the Public Blockchain with new consensus algorithms, reducing the state of art of validation but at the same time scale the public Network rather than creates Hybrids Private Blockchains.
The real problem is that the request to use Blockchain Technology is huge for non financial use case, but the technology is not ready to mass adoption and at the same time the real values are difficult to be understood because you have to deal with every complex aspect of the financial world with every complexity in the technology world and The Trustless, a concept with a generational gap that is more similar to the Millennials-oriented mindset rather than Gen X and B.B. way to think.
Wait but why?
A Trustless validation in a network or decentralized Application is a fundamental feature to develop the technology for tomorrow. The hidden real values of the Blockchain Technology is Decentralized Data, the concept of track data without trusting entities, but in a Trustless way.
More Decentralized is the network and the quality of how a Decentralized Application track the data, more valuable is the data itself.
To understand as well this concept we need to think, about how data is valuable today, and how today’s data is manipulable and is based on entities validation.
How much could be valuable in the future Trustless and decentralized data?
The concept of Decentralized Data
In Tech terms building a Dapp and starting to make Decentralized Data is simple, but the real issue is based on how Decentralized Data works.
To build a Decentralized Logic and make Decentralized Data, maintaining the Trustless values on it, you can’t just develop centralized apps and use transactions to put data into a Blockchain, because in that way you forget to validate “What” and “How” a user creates a piece of information and so, in the end, to prove your data people have to trust your company as a validator of what is happened and you lose the Trustless validation.
This problem was debated for years in the Crypto community because the pioneer of this technology understood at the time that the opportunity of decentralization it would have been much more than just financial transactions.
A lot of projects have tried to decentralized logic building layers on top of Bitcoin or other Blockchains, but most of it failed because that Blockchains are not developed to decentralize Logic but only Values.
The first project that solved this fundamental issue was Ethereum founded by Vitalik Buterin a famous early active user in the Bitcoin community.
Ethereum disrupted the Blockchain Technology at the time developing a new Blockchain Network, designed to transact logic with the mission to be the first Operative System for Smart-Contracts, applications and Decentralized Data.
The core of the concept of the Ethereum Technology, settled the standards od what we called today “The Second Generation Of Blockchain Technology” because Vitalik introduced the idea to validate inside Blockchain’s blocks decentralized logic with the concept of Smart Contract.
With the introduction of Smart Contract Technology basically, a developer to interact with the Ethereum Network have to decentralized his functions.
Every time a User interacts with a Decentralized Function, he has to make an Ethereum transaction. During the Ethereum transaction, the network validates inside the block, the called function, the request and the result. These three aspects are fundamental to deliver Decentralized Data, in a complete Trustless way.
We’re in a Bubble in Blockchain Technology, like the 90’s tech bubble, were the 1% of people have understood this technology and is dangerous for who didn’t understood it.