So a few days ago Deconomy 2018 (Distributed Economy) took place in Seoul, Korea. Man, some interesting stuff was discussed there! I've been watching a few videos of talks and I like the deep depths and discussions.
One talk was from Ethereum founder Vitalik Buterin and I want to highlight a very important point he was making. He talks about blockchains and trade-offs and talked about how public blockchains are somewhere between 1,000x and 1,000,000x less efficient in terms of costs compared to centralized services (from Google, Amazon etc.)
Personally, I think there is a question that needs to be asked much more often before we invest in a cryptocurrency or dApp:
"Is it worth to have this particular use case on a blockchain if the costs are a 1,000 times higher compared to a centralized solution?"
Very often I find myself answering this question with a no. Which means a no to investing in the project.
But how do you determine whether it is worth it? Vitalik gives a list of potential reasons to check for (the most important ones):
- Censorship resistance (ie. third party interference, eg. governments, banks/payment processors, internet companies)
- Fraud resistance (ie. first party interference, eg. exit scams)
- Transparency
- Robustness (ie. won't just randomly go offline due to one computer failure)
- Interoperability (including permissionless interoperability)
And of course it is not a question about IF these elements are a reason for using blockchain, but to what extent they are a good reason for it. For instance, is a little bit more transparency really worth 1,000x higher costs?
Definitely some stuff to think about.
Next to that, definitely ask the question to the team that does the ICO you are thinking about investing in. They have to come up with a good answer. And if they answer this to your satisfaction, definitely ask them the follow-up question about why they need a token ;-) That is called doing your own research (DYOR)!
Vitalik's talk
If you would like to watch Vitalik's talk, here you go:
Part 1
Part 2
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Disclaimer: I am not a financial advisor, trader or developer. I am just a blockchain & cryptocurrencies enthusiast. Make sure you do your own research, draw your own conclusions and do not invest any money that you cannot afford to lose.
They have a point. If everything really goes down because of just 1 computer then it's indeed will be problematic when it happens. Taking a solution to avoid that sounds great to me.
These questions would certainly help potential investors to 'look' before 'leaping'.
Many thankssssssss for sharing.
Cheers @cryptotem
Good review. going to watch it
Definitely do! It is quite technical at some point, but part 1 is definitely more easy to consume.
His talks are always great. Will check it out!