Could we be wrong about cryptocurrency? Blockchain without a currency!
We do always see the blockchain technology and the cryptocurrency as one. But this is a misperception.
While one can life without the other, it is very hard to imagine that the other could life without the one.
I want to see, if you all believe in blockchains without a cryptocurrency! I do, but they will probably exist as a brother of the blockchains with a cryptocurrency.
I do not want to undermine the cryptos, but when investing and believing in something we sometimes need to think outside the box, to get an idea how strong our believe is.
Why do blockchains have a native currency?
Well there are several reasons for this.
- To keep the blockchain running
This is the so called mining. A blockchain is only blockchain is there are enough nodes available. Each node has a complete copy of the blockchain and do intensive tasks to keep the blockchain alive. In proof-of-work and proof-of- stake, there are rewarded for creating new blocks, and validating transaction. In the first case they will receive some fresh mined coins and in the second case they are rewarded with a transaction fee. - It is part of the business model
This one is really easy, people are apps have to pay the blockchain to make use of it. This could be done in the own cryptocurrency of in the cryptocurrency of the blockchain it is running on. Take for instance Zeepin, which is running on the NEO blockchain.
Another example is that the purpose of the blockchain is, so that people could money around. Person X could pay person Y via the blockchain. - To reward the creators of the blockchain
Most of the time, not all coins are handed out to the market. The founders of the blockchain will have a fait share of the coins, which they could sell. How more important the blockchain becomes, the more value these coins will have.
There are probably more reasons, but these ones spring to my mind!
A blockchain without cryptocurrency
A blockchain can easily exists without a native or other cryptocurrency. No doubt about it!
The only reason which has to be fulfilled is that all parties involved have enough benefits from the blockchain to be there. The benefit is big enough so that they don't need to be paid to run/host a masternode. Probably by using the blockchain for information means a steep decrease is operational costs, so that it is worth the effort!
These blockchain will mostly be connected to a particular industry or country based!
One can argue that a blockchain without cryptocurrency is just an enhanced decentralize database, but what's wrong with that. It is a major improvement then!
Let's take the people administration within a country as example.
At the moment it is just a centralized database to which some parties are having reading rights on. These parties do have access to it, but can not validate the data, this can only by done by the government. To be able to use this data, these companies probably copy huge chunks of data to their own databases. This costs time and money!
Now let's suppose that a blockchain solution comes into place. This will have the following benefits.
- the government has improved the security of the data. Suddenly if one want to hack the data, it has to hack enough masternodes of the blockchain to get consensus.
- the company using this blockchain will probably haven been granted access to the blockchain via smart contracts, also based on the smart contracts they will only have read access to the data and only access the person data were they are entitled to. They don't have to extract a fresh batch of data each time from the countries people administration anymore, cause it is at their premises in the blockchain. Via trigger they are automatically warned about a change in the life of the person, which is valid for their system (think about becoming registering a marriage or divorce, the birth of a child and so on).
You even could think of examples where a private blockchain is setup to which some parties gets access to via a smart contract. Even if these parties need to pay for accessing the blockchain, this could be done is regular fiat money without using the blockchain.
As long as all parties involved do have enough benefit of the blockchain, their is no use to be rewarded to keep the blockchain alive!
What do you think?
I can imagine that in the end their will be at least as many blockchain without a cryptocurrency then with a cryptocurrency.
What are you ideas about this topic. I would like to read them! Let’s discuss!
Keep the faith,
Peter
I think that if you will do a benefitial tokenless blockchain it will fall to the "tragedy of commons". All want to use it as much as possible, but not to pay for it. So no one will have a masternode unless it's obligatory to have one to get access.
You need some genius trick to make a good blockchain without token. Some new tecnology or approach.
As long as the beneficial rewards of all parties are high enough to keep the blockchain running it would be enough.
Most first usecases will probably governamental. It is for the governments important that for instance the people administration is stable and secure and for all the companies that need to use this data, that they have direct access to it, without having to copy large chuncks of data to their own databases. In this case all parties benefit from such a blockchain to keep it running.
Via smart contracts the governments can grant access to the blockchain and even retrict which data which company is allowed to see!
Here's my theory (based on absolutely no evidence whatsoever, it just sounds good).
The crypto market is run by the NSA. The 'difficult' sums that miners do is really factorising large prime numbers, the ones used to encrypt everything from email to online banking.
It's extremely dificult to factorise large prime numbers, unless you have a quantum computer (that's coming...) or you have a very large botnet of able machines that crunch numbers all day long...
I totally just made all that up, but you never know... woooo !
The blockchain tech as many people view it isn't how it will exist in the corporate and governmental roles. There will not be coins attached to these blockchains and the ledger will not be completely decentralized. I'd argue that most current blockchains aren't completely decentralized anyways due to the high level of computing power needed.
Time will tell if the coins will even survive. I feel they will, but they will no long be automatically attached to each blockchain but rather be included when it makes sense....or when someone is trying to create instant wealth for themselves like so many of the scammy alt coins out there.
I guess that not more than 50% of the coins we have now will survive.
For each industry max 5 coins will be used. Compare it to the search engines in the beginning of the inernet, the best of those days even don’t exist anymore!
The same will happen to the coins. Some will survive other will be replaced by better ones!
Thx for dropping by!
At best 10% survived. 50% is WAY to high as most serve no purpose whatsoever.
This is like the days of the dotcom boom. So many companies had value just because they owned a dotcom, but the "burst" didn't end the internet. Rather is made it stronger as the scam artists running IPO's with nothing more then hype were done away with and a new higher standard was applied against the companies that already existed. Some of the most valuable companies in the world survived this time frame. I feel that is what will happen with the current coins. The ones that survive will thrive in a marketplace that isn't cluttered with so much trash.
I think you are spot on with this. I never understood why all blockchains have currencies. Especially most of these altcoins.
Do you think it's possible that blockchain technology was created by an AI? And the cryptocurrency part was just put there to give us humans an incentive to build the infrastructure through building mining rigs.
Think about it this way: AI needs physical computers to exist, and as humans mine crypto thereby building the blockchain, they continuously expand the world wide AI brain! The humans have a financial incentive to build the computers.
All three of your reasons as to why blockchains have a native currency fit into this idea perfectly. What do you think?
I doubt it that AI is already that far evolved that it would be capable of setting up such a big and beautiful thing.
I do think AI well be the next step after RPA (Robotic Process Automation).
To be honest, AI scares me a little bit. But as long as we can pull the plug, we will be alright!
So no, I don't believe that AI created the bitcoin but I can't rule it out!
After rereading the reason, it could make sense. The AI would have determined that people will do almost everything to make a profit and setup the cryptocurrency as bait.
well, the problem is that people mining the coins are the ones who actually make whole idea work. network without miners is dead, anyone can add to it anything.
This is only partly true according to me. There is still the transaction fee which is paid out to the one, keeping the blockchain alive. Don't forget that there are blockchain available were all coins were already pre-mined and they also keep on running!
But indeed, I do wonder what will happen to the bitcoin blockchain once all coins are mined.
well, if you have fees it kind of means there is currency there? ;)
Yeah but I was referring to a network in which there is a cryptocurrency present!
Without crypto of course no mining, nor transaction fees (or at least not via the blockchain, it could be possible that the creator of the blockchain will ask a subscription fee, which would be payable outside the blockchain).
I really don't like the term "private blockchain."
To me, it's synonymous with "private database."
The core fundamentals of what makes a blockchain a blockchain involve teokenomics and game theory based on a financial value (or perceived future financial value) of the token that secures it. When people claim they can have a secure blockchain without a valuable token to secure it, I have to think they don't fully understand blockchain technology yet and may benefit from reading the original white paper a few more times.
Without the open, dynamic, market-driven, byzantine-fault tolerant nature of the system, then it no longer qualifies as a blockchain. Distributed databases have been around for a long time and they provide value for their existence that exceeds their operational costs. That's nothing new. A blockchain without a cryptocurrency is easily attackable.
Is it possible other distributed ledger technologies might evolve in the future such as DAGs which could eliminate the idea of a token and just deal directly with some other source of "work"? Maybe... but to me, it would still serve the same service the token currently serves.
I agree with the statement that it could be seen as a distributed private database, but I disagree that it is no blockchain cause there is not cryptocurrency involved.
It could use from all the benefits of the consensus, timestamping, security, smart contracts and so on. I also don't understand why it could not use the byzantine-fault tolerance, there are no coins needed for that. If the tokenless blockchain does has 10 nodes, all of the above could be implemented. The rewards of being part of the blockchain should be high enough though to keep it running.
I have to admit that I did not read the bitcoin white paper (will do soon). The example above can hardly be compared with a decentralized database, in my opinion.
One of the biggest reason why the bitcoin use case is so great, cause it aims to eliminate middle men and double spending. This can of course only be guaranteed if the bitcoin is created and maintained by the blockchain. But I can better read the whitepaper first :)
Thx for your insight, really appreciated it. Although we are not completely on the same page :)
All the examples you list already exist in private, distributed databases (though “smart contracts” would be called table triggers in SQL). I say this as someone who has worked with databases for over two decades. Can you clarify exactly what you mean when you say “blockchain”? If you haven’t yet read the defining document for that term, maybe you have unexamined opinions?
While I do understand the basis of the blockchain, I did not read the BTC whitepaper until 5 minutes ago.
If we do compare the standard distributed database with the private blockchain, there are IMO completely something different. Almost all DDs (distributed datase) are based on replication or duplication, which both have their pros and cons. If in a duplication the master has been compromised, the slaves will also be compromised. If in the replication a hacker intrudes into one of the database, the fault record would/could be copied into the others.
In a private blockchain, the consensus mechanism is still in place (even in blockchain without a token). A new block is only approved if their is consensus in the complete blockchain. In the original whitepaper the first transaction in the new block, is the transaction which rewards the coin to the creator of the block, in a token less blockchain, this would not be necessary.
But to respond to your question:
A network of nodes, where information (important to the use case) is gathered and stored in block. Each block will have a hash based on the content of the block. The next block in the chain will refer to the previous block, creating the chain. New blocks are proposed to the network and will only be accepted if there is a consensus between the nodes in the network. When one of the older blocks is tampered with, it will not be accepted by the network cause the chain will be broken ( the hash will be changed). To succesfully attack the blockchain, the hackers must be capable of hacking enough nodes, and rewrite the complete block after the tampered block on all nodes, before one of the other nodes creates a new blocks. You can add to this the timing mechanism, the smart contracts, and so. By doing this there is no need for a third party to trust each other but the trust is based in the cryptography of the blockchain.
This is short what I would call a blockchain.
In my opinion each of this could be perfectly feasible with or without a native crypto currency. And not all of the above could be done on a distributed database.
If I do have some things wrong, please do not hesitate to correct me. I can only learn from it.
The mechanisms you mention regarding consensus are what distinguish a private database from a blockchain because a private database obtains consensus via controlling the nodes where a blockchain is uncontrolled and wide open to attack. It's that open nature, to me, that separates a blockchain from a database. The only thing protecting it is the incentive provided to the block producers to be rational actors in the best interests of themselves and the network. That incentive only comes through the distribution of a valuable token. I have yet to see any other mechanism for providing that incentive. I have seen blockchains with tokens of little value be 51% attacked. If the token is not valued enough, not enough miners will mine the blockchain to reach useful, secure consensus which means it will fail. I say "mining" here but similar economic incentives exist for DPOS as well.