There’s no argument that cryptocurrencies have an exciting air of disruption about them, with the potential to change core aspects of everyday life, like creating programmable economies. It’s difficult to measure the degree of disruption objectively but it is possible to examine the indicators that historically coincide with profound technological innovation.
One of the largest disruptions of modern time was without a doubt the birth of the Internet, which created the ability to interconnect the world digitally in a matter of milliseconds. An indicator coinciding with this event was the dot-com bubble of 1997–2001, a period of excessive market speculation and wild growth.
There are similarities between this period to today’s crypto bubble and evidence that the crypto bubble is even greater in magnitude. While we should approach bubbles cautiously, they are a requirement for extreme growth over a short period of time.
Many companies did not survive the collapse of the dot-com bubble, but the giants of today’s digital world, companies like Amazon and Google, emerged from the wreckage. We believe that the key for doing the same is planting firm roots in substantiated value and ignoring hype in general. These are guiding principles for Orbs and will be covered in greater depth throughout this paper.
If the Internet was the technological breakthrough driving the dot-com era, what is the underlying technology driving today’s crypto era? Cryptocurrencies are not a technology unto themselves but applications of a technology. This technology is decentralized consensus.
Decentralized systems are distributed systems where a group of independent but equally privileged nodes operate on local information to accomplish global goals. These systems lack a central controller that exercises governance, supervision and control over the system, thus allowing power to be distributed over the network in a more uniform and fair manner. Distributed systems are not new, with applications such as Napster driving the peer-to-peer boom of the early 2000s.
Consensus is a shared view of reality that is agreed upon between different parts of a system. Consider the most trivial example of a consumer application — an instant messenger where users can chat amongst themselves. This system requires consensus to operate, allowing every user to authenticate and speak only on their own behalf. All members must reach a shared view of reality regarding which user is which, who owns every username and so forth. The consensus property is very easy to achieve in centralized systems, where a single governing body is trusted by all members to define this shared reality.
Whereas decentralized systems are easy to build without consensus and consensus is easy to achieve in centralized systems, maintaining both properties in the same system proves difficult. This is the underlying innovation in the field of decentralized consensus. The ability to build decentralized systems where a group of independent but equally privileged nodes are able to reach a shared view of reality. Cryptocurrencies are an excellent example of an application that requires such a system, where agreement upon the ledger of transactions and balances can be reached without a governing body.
The term blockchain originates from a core implementation construct of cryptocurrencies such as Bitcoin and refers to a continuously growing list of records, called blocks, which are linked and secured using cryptography. This chain of blocks holds the journal of all transactions in the network and forms the distributed ledger. The term blockchain has become synonymous with the core technology providing the infrastructure for such applications.
Building the next generation of blockchain infrastructure has become a fertile ground for innovation and dozens of teams are currently racing to deliver the “best” one. Many of these projects position themselves, sometimes even explicitly, as candidates for the blockchain to rule all blockchains. We believe that this mentality is flawed.
History shows that silver bullets are rare: complex problems are not solved by a single, simple solution. We believe that there will be no blockchain to rule all blockchains. A general-purpose blockchain can only optimize for the lowest common denominator. Therefore, the first step towards building a practical blockchain is articulating a clear use case — defining a real world need that this blockchain infrastructure is attempting to resolve and determining whether or not a market for this need actually exists.