What is the Point of a Blockchain?

When you use Smart Contracts you are asking the blockchain to do two things that blockchains are not designed to do: be a database and be a pocket calculator.

The blockchain functions as a pocket calculator when you ask it to compute 1 + 0—as in the NFT mint case above—and it functions as a database when you ask it to store the resulting value.

Blockchains can certainly do these things, and, if cost is no issue, can sometimes do them better than competing technologies. However you do not need a blockchain to store data or perform computations in a secure and decentralized fashion.

Take IPFS for example: when a file is stored on IPFS and you know the hash you can have complete certainty that is has not been tampered with. It also cannot be removed by any one party.

People argue, as I myself have done in the past, that IPFS is inferior to on-chain storage because there is no guarantee of availability. There is truth to this, but when we think big picture we shouldn't be focusing on areas in which a blockchain can—at great cost—be incrementally superior than the next best option. We should focus on areas where there is no next best option.

Likewise, it is convenient to be able to trust the data in Smart Contract storage without having to manually verify all the calculations. But do we want to pay exorbitant fees to coax Ethereum into performing calculations we can easily do ourselves with a calculator or even in our heads? We don't need a blockchain to tell us that 1 + 0 = 1!

We don't need a blockchain to perform deterministic tasks. Tasks where we know what the right answer must be based on rules we all accept and initial conditions we all know.

Instead, we should use blockchains to perform the crucial non-deterministic task of ordering transactions. When it comes to ordering transactions there is no next-best non-blockchain option. We are most effective when we position blockchains to work exclusively on this one task they do better than anything else. For all other tasks, we can engineer non-blockchain solutions.

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