This article was first published on Stories by AppCoins Official on Medium
Much have been spoken about Blockchain scalability. It is commonly accepted that existing blockchains cannot yet support the demanding requirements of existing businesses with millions of transactions per day. This post challenges that idea.
Trust is not an absolute value. Every business has to find the optimal trade-off between “trust” and “on-chain activity”.
This framework contributes with tools in two dimensions:
Level of Trust. For each business case, there is an “intrinsic” level of trust between the players and a “desirable” level of trust (needed for the transaction to occur). “On-chain activity” bridges the two levels of trust.
On-chain activity. Blockchain can be used in various ways, but two of them correspond to 99% of existing use cases:
— “Currency ownership”: the user has the custody and has control over the “digital money” owned. “Store-of-value” and “payments” are different applications leveraged by currency ownership.
— “State notarisation”: the certification that a certain state occurred in a specific moment of time.
The optimal trade-off is the one that reaches the “level of trust” required for the business to be carried on, while minimizing the “on-chain activity”.
The relations between economical actors can be classified by the level of trust between them. Levels of trust can be subjective and evaluated in different dimensions: “How much information do I have?”, “What is the liability of a faulty behaviour?”,…
The trust and risk evaluation was always part of doing business. In the past, when the “intrinsic” trust was not enough to conduct business, two things happened: the business was aborted or there was a “middleman” involvement that both parties can trust. Blockchain is a technology that plays that role and that can be used to raise the “intrinsic” trust ...
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Stories by AppCoins Official on Medium