Blockchain Models Scratch Paper

Often I find myself trying to come up with abstractions and mental models for blockchain to 1) make it easier for people learning about it for the first time to understand it without being bogged down with technical details and 2) abstract my own understanding of it so I can think beyond just these foundational concepts and more like a web3 native. The following are some recent notes.

Basic idea blockchain enables, basics of interaction

  • Blockchain is just a virtual computer running on top of a network of untrusting computers
  • The computers run software that cooperates with the other computers to ensure they agree on the same state of the computer, i.e. what the data on the computer is at the moment or what changes to the data will occur
  • Typically on a blockchain, there is a native cryptocurrency that is used to reward people who run these computers
  • The main data on the blockchain is the amounts of the cryptocurrency that different accounts have
  • Anyone can use their own computer to send data to the blockchain - this is called a transaction
  • The most basic transaction is a transaction in its literal sense - sending some of the blockchain's native coin to another person
  • Another transaction would be uploading some code, often called program or smart contract, to the blockchain
  • The last type of transaction would be telling the blockchain to run that code, or any code that anyone else uploads
  • To recap, a transaction can do three main things. They can 1) send the blockchain's native currency to another person 2) upload code 3) invoke some code to run
  • The data on the blockchain virtual computer is permanent and immutable, functioning more like a log of all the transactions on the network

Decentralization, democratization, digital ownership

  • Socialists would like to decentralize by diminishing the potency of wealth via equalizing of the wealth distribution
  • Blockchain decentralizes by plugging monetary value into everything, still diminishing the difference in people's lives caused by wealth, with regards to the discrepancy between the value people create and the amount they are compensated
  • Blockchain is revolutionizing the internet
  • The internet allowed for these opportunities for people to more easily interact with people from anywhere, in a way being a global matchmaker between people creating value and people consuming value - created new ways for people to create value, as well as eliminated lots of barriers for entry and restriction of geographical location
  • Blockchain allows for people to unite on sources of truth not governed by a central authority
  • This combined with verifiability and permanence allows for ownership on the web
  • Creates an asymetric funnel - anyone can issue digital goods for people to own, but that ownership is unique to the owner
  • Allows for scarcity → allows for value
  • At the same time, anyone can issue these things, these things being arbitrary data. Now you can manipulate value like data, because the data now can have value.
  • When you can manipulate value like data, this opens opportunities to create incentivized systems via the manipulation of data, i.e. using code, building platforms (systems)