Vitalik Buterin: Non-Financial Applications of Blockchain

  1. Time for a brief tweetstorm on non-financial applications of blockchains. As blockchain scalability gets better and better, and UX improves and fees drop as a result, this will become a bigger and bigger part of the story.

  2. One underappreciated way to view blockchains is as an extension of cryptography that does different things. Cryptography allows you to encrypt data, prove data was signed by someone, etc etc… blockchains OTOH allow you to prove that a piece of data was not published.

  3. A simple example is a blockchain university degree verification app I saw recently. A degree is certified with just a digital signature, but revocations are put on chain. With cryptography alone you can’t check that a revocation was not signed; but with a blockchain…

  4. To check that a degree was not yet revoked, you simply scan the chain and check all of the logs of the revocation contract. If a given degree was signed, and the revocation is not found on chain, then that means it’s still valid.

  5. You can extend this to other contexts. A big one is key revocation in self-sovereign identity. If you have a key A, then you switch to key B, then key A is hacked later, how does someone you’re interacting with no key A is no longer valid? Can check for revocations on chain.

  6. Another category of use cases is verifying integrity of processes. For example, in an auction, you might want to verify that everyone’s bid that was submitted on time was included, and no late bids were included. If bids are published to chain, even encrypted, you can do this.

  7. There are also many categories of use cases where different applications need to be on a common database, and it’s just more convenient (or less risk of capture) if it’s a credibly neutral platform. Supply chain tracing stuff theoretically falls here.

  8. Public blockchains have a genuine competitive advantage over both centralized servers and consortium chains in credibly signaling neutrality. Right now it seems like benefits like this might not be worth the costs of public chains, but that’s just the public chains of today…

  9. Blockchains of the future with proof of stake and sharding will be thousands of times more efficient, and so the efficiency sacrifices of putting things on a chain will become more and more acceptable.

  10. Blockchains are NOT about cutting computational costs (at least relative to centralized servers). Blockchains are about incurring a sacrifice in the form of INCREASED computational costs to achieve a decrease in social costs.

  11. Computers have become 1 trillion times cheaper, per unit computation, in the last 70 years. Human labor has gotten 2-10x more expensive. So incurring high technical costs to achieve reductions in social costs is at least sometimes a very good bargain.

  12. If layer 1 becomes cheap enough I literally foresee things like receipts of everyday purchases being published to blockchains. Because it’ll just be the simplest tool out there for achieving the desired guarantees of verifiability, non-double-spending, etc.

  13. Another interesting thing that blockchains give is the value of permanence. For example, an ERC721 collectible that you hold in your ethereum wallet is “yours” in a very real cryptographic sense that would not be the case if it was just stored in a centralized server.

  14. Centralized servers can decide to change the rules later, they can get hacked, or they can just shut down if the company disappears. A blockchain Merkle receipt, on the other hand, is forever.

  15. Non-financial applications have a leg up over financial ones in one important sense: there is less at stake if they break, so fewer reasons to fear deploying them fairly quickly. So they could be the first applications deployed widely, especially in institutional contexts.

via vb

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