Hi friends 👋,
This article is a collection and exploration of thoughts I’ve been mulling over the past few weeks. In particular, I’ve been trying to recapture my understanding of blockchain’s fundamental value. Specifically how blockchains — independent of the Web3 narrative — can deliver value to end-users.
I would consider this article a tour of my notes app, more so than an attempt to deliver a cohesive narrative. It’s my hope that these unpolished thoughts expose more threads to pull on. That in their roughness they spark new perspectives and your independent thinking.
Let’s get to it 🚀
P.S. My team and I just launched our testnet! Mantle is an Ethereum rollup/L2 network. If you want to try it out, you can follow this Onboarding Guide to get started and also visit this dApp I built to try it out. DM me with any questions!
#1 Blockchains are user-centric databases
One of the consequences of working for a blockchain company is being asked to describe blockchains in casual social settings. After one too many blank stares, I’ve learned to rely on the same quick-fire response (inspired by Balaji):
Blockchains are like a database that anyone can read or write to.
For the technically inclined, this is actually a profoundly new concept. Anyone who has built an app is familiar with databases that have a single admin. Here, all changes to data are managed by one person or company. Occasionally other companies or people can update data by using a permissioned API, which can often be restrictive (one of the many reasons there are not functional bots on Twitter). But what would happen to an app if anyone, anywhere could make changes to application data?
It would be chaos.
Whether you measure it by human error, or by the inevitable trolls who want to watch the world burn, a multi-admin database seems destined to fall apart. Just imagine if this database kept track of something important, like your bank account balance. One day, someone would get the bright idea to put all of your money into their account. Experiment over.
And yet, today, blockchains are used by millions of users to store many forms of data. Everything from social media posts to account balances that represent literal money. So how did we get this to work?
Multi-admin databases are only possible because blockchains have strict rules on who can update what data. Your account is associated with a cryptographic password (private + public key), and every interaction involves using that password to prove you have the ‘right’ to update your own data. This makes blockchains user-centric in a way that traditional databases aren’t.
This is the power of democratized cryptography, which I feel is the real undercurrent beneath blockchain and Web3. By empowering users with their own admin rights (scoped to private/public keys!), we now have something which functions like a multi-admin database. If you were to submit a change for someone else’s data, a blockchain would reject you.
When I imagine the potential of blockchains, I think of the entirely new design space that is opened up by an internet with user-controlled databases. What new use cases will emerge when individuals own the rights to their own data. And if you want to know why this is important, you can read my past article here.
#2 Blockchains deliver global, marginal value
As a product manager at Windranger Labs, I’ve worked on dApps in most major categories (NFTs, DeFi, DAO). During the early stages of an idea, we will often ask ourselves “What makes blockchain necessary here?”. This may sound strange for a company that literally works for a DAO, but it’s how you make sure you don’t build products purely for the sake of technology.
What I’ve learned is that at first glance it will nearly always appear that including blockchains in your project adds technical risk and user friction. This is because most products are trying to deliver what I call local value. You can think of local value as the value that can be delivered to a user with only their own data. This is your notes app, music streaming service, food delivery app, and any software that is more ‘product’ than platform.
Now, of course, local value is one end of a spectrum. The other pole is global value, which is the value a user can receive from having access to other users’ data. Products in this paradigm are social networks or marketplaces, which more or less try ensure everyone’s data is accessible to all users on the platform.
So where do blockchains fit into the picture? Blockchains specialize in delivering global value. They are the platform for holding user data. Multiple apps can publish data to a blockchain just like multiple users can post their tweets on Twitter. So an easy test for whether an app would benefit from a blockchain integration is to consider where you are trying to create / take advantage of network effects.
The interesting value prop for apps here is that you can build on a blockchain and benefit from existing data on the blockchain. So it in fact lowers the barrier for apps to tap into such network effects.
A key point to address is whether or not blockchains are the only platform that can deliver this type of global value. That’s clearly not the case, given that social networks and financial markets exist without the use of blockchains. Where blockchains shine is that their theoretical limit for providing global value is to facilitate access to all data. So the maximum value prop for blockchains is to enable a fusion of every imaginable permutation of user data. This is an example of blockchains at their peak value.
However, as with all network effects-based businesses, our challenge is that value increases slowly with every marginal data point. At the time of this writing, Lens Protocol, a leading decentralized social protocol, only has ~165K users with 8.5M transactions on the platform (you can see data using this dashboard). On the other hand, Twitter facilitates billions of interactions between users each day. The claim here (practically a tautology in the 21st-century) is that more interactions and more data on a platform increase total value for users of the system.
#3 Blockchain is an industry (like any other)
Long ago, companies (and users) stopped running their own servers and moved to the cloud. You should know that we call ‘the cloud’ is just software that offers an interface to real, physical computers somewhere in the world. It’s really just an abstraction for storage and processing capabilities, as data centres frequently run multiple virtual machines on the same physical device!
This is good framing because blockchains, in many ways, operate like an abstract computer. In fact, if blockchains are just databases with rules, that means they must have both storage and compute power to enforce those rules. This lets us appreciate a fresh perspective: that just like there is a cloud computing industry, there also exists a blockchain computing industry.
We are so awash in personal computing products that we are blind to the churning of the industry beneath. Companies exist, many of them worth billions of dollars, that make generational bets on different hardware/software paradigms. Examples here include RISC vs CISC, MongoDB vs SQL, Ruby on Rails vs. Node.js. Reality requires that product frameworks differentiate and find distinct, profitable niches.
This same rule applies to the blockchain space. Ethereum, Solana, Cosmos, and Polygon all have unique approaches to building blockchains that appeal to users and developers for different reasons. Some chains will win because of superior architecture, others based on their user experience. There is also a vast ecosystem of blockchain infrastructure companies that fit into very specific niches, often solving direct pain points for developers and users. These include RPC provider services, block explorers, blockchain indexers, and more.
One of the greatest misconceptions I see is casting too wide a net on “blockchain” as a product category. This would be similar in resolution to saying “cloud industry”, which offers an efficient labels at the cost of true understanding.
If you enjoyed this article consider subscribing for regular content on the technology that will shape our future!
If you really enjoyed this article consider sharing it with an intellectually curious friend or family member!
Let me know what you thought about this piece on Twitter.
With gratitude,
Cooper ✌️