the core value of blockchain

In the wild wild west of web3 too many people get distracted by fantastical use cases. It’s important sometimes to narrow your focus back to the fundamentals.

Why would you want something to exist on the blockchain rather than anywhere else?

I find that most ‘answers’ to this fundamental question will dance around an actual answer with broad claims about potential use cases. I would happily chat about decentralizing society and cutting the middlemen out of finance for hours on end, but I also want to know what it is exactly that you value about blockchain.

For me, it is the perfect knowledge of an exchange. If I want to know exactly where I am sending a coin or a good and how that coin/good is subsequently used, I want it to be on the blockchain.

I value this so highly because it is the imperfect knowledge of centralized exchanges that makes them so corruptible and directs the incentive structures away from cooperation. I don’t need to go any further than the original Charles Ponzi to prove that point. When you send your money somewhere with the expectation of something in return, you are always at the whim of whatever centralized party is overseeing that transaction. Financial transactions in centralized fiat currencies are all taken advantage of by middlemen, whether it’s a credit card company or a flash trader skimming money off your investment. Not only is it unfair to the individuals losing money in the transaction, but it seems wasteful that so many brilliant minds put their mental energy towards stealing a chunk of money from exchanges of goods and investments. But this is likely my fuel for another blog post.

It’s this perfect knowledge of exchange that gives blockchain its use-cases in human coordination.

In a zero-knowledge setting each individual is incentivized to act selfishly. When you add a layer of incentives on top in the form of perfect knowledge of how others will behave, your incentives will change. In the case of soul-bound tokens, quadratic voting, retroactive funding (and many more), perfect knowledge of the exchanges happening on-chain is necessary for the human coordination that powers these.