Truth and trust
Traditional tech held all authority over your data in their database. Web3 let's you take back that authority, and it just got a lot more carbon neutral.
Today is a landmark in the blockchain world. Ethereum just underwent “The Merge” which is a major upgrade for the system. In commemoration of that, I wanted to write this piece to review the fundamental feature of why blockchains have been so revolutionary.
Blockchain is a simple story about trust and the truth.
The truth of one winner
“History is Written by Victors.”
Interestingly, this famous quote exactly captures the disruption of blockchain technology. In traditional tech, history is data and victors are tech giants—Google, Meta, Amazons of the world. Their data defines who you are online.
For example if big tech decides to delete your account or change your data (follower count, analytics, etc) there is little you could do about it. You entrusted your data to them, wittingly or not, and they can now decide what is true.
The truth of many people
If you don’t like the idea of your identity being controlled by a single company, then there must be a different way:
What if my data wasn’t in just one database, but rather across many?
What if many people checked each other’s database, to make sure it’s valid?
What are the requirements and incentives for people to check correctly?
All very fair questions if you want to trust many people, instead of one ‘professional’ company. And that’s exactly what blockchain aims to do. By decentralizing the responsibility to arrive at the truth, you ideally have more trust and confidence that your data will be safe and correct.
Consensus—how many people arrive at the truth
If you like the idea of putting your trust in many people rather than one company, then the next question is how do they agree on the truth?
By majority vote? That is, do a bunch of people just come together and vote on what they think is correct and then that becomes law? That sounds inefficient and also problematic.
By election? Do these people that validate the truth elect one person at a time to decide what’s true and you just rotate between these people? Again, that also sounds like it has problems.
By incentives? Is providing the truth easier and more beneficial for the people you’ve trusted compared to creating a lie?
These are the questions blockchain tech tackles. Blockchain calls these consensus mechanisms. There are two popular types of consensus mechanisms today:
Proof of Work - This is what Bitcoin uses and what Ethereum used to use, before The Merge that recently happened.
Proof of Stake - This is what Ethereum moved to with The Merge. It uses significantly less energy compared to Proof of Work and reduces Ethereum’s carbon footprint!
If you want to geek out on the technical differences of the two consensus mechanisms, this article from Coinbase covers that.
What’s the ‘so what’?
Now sure, there’s two ways to arrive at the truth. Trust one person, or trust many. Why does that matter? Well that depends on what you value!
How much do you value truth? I know there’s some nuance here. For example, I wouldn’t care much if it’s just the ‘truth’ of my coffee purchase yesterday. But it’s a different story if we’re talking about my credit score and overall transaction history! In that sense, blockchain likely won’t be the answer to everything but it will be revolutionary for big things.
How much will it cost to get the truth? If one person effectively holds a monopoly on your data, doesn’t that mean they can charge you a lot of money or resources for it? I mean, or else what can you do aside from pay up? But if trust is decentralized and democratized, then you break the monopoly. Think about traditional ‘trust-based’ systems like payment systems, banks, and money transfers. With a decentralized trusted system, fees should be significantly lower!
With the move of Ethereum to a more efficient trust system, I hope this moves us closer to a world where most of the Truth in our daily lives aren’t controlled by one person.
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