CfC St. Moritz | Evolving the Blockchain

The Internet changed the world, but instead of a solitary event, those changes continue, revolutionizing commerce and communication. The biggest network advances include mobile data and the cloud, and now, blockchain technology.

The blockchain, with its resilience, cost-effectiveness, and accessibility, represents the future of networking. These values make it a clear evolution in global networking technology, moving beyond the cloud. Yet getting here took years of development.

Bitcoin's emergence in 2009 gave the world the first glimpse of a blockchain network, but its focus on launching a stateless digital currency severely limited its scope. Its proof-of-work model, requiring ever more compute resources to generate, makes it unsustainable, a 21st century tulip.

Beyond Bitcoin

In recent years, blockchains such as Ethereum and Solana improved greatly upon the technology, offering the world a usable network alternative to cloud services capable of hosting all manner of software. These layer 1 blockchains serve as completely open network operating systems, letting anyone build and deploy apps on them.

A layer 1 blockchain consists of independently run servers, commonly known as validators and full nodes. Unlike a cloud, where Google, Amazon, or Microsoft maintain full control of each server, blockchain technology institutes built-in trust mechanisms based on cutting edge cryptography. Each independent validator does not need to trust its network colleagues, as the technology ensures veracity and continuity.

The independent, decentralized nature of blockchain technology finds its roots in the origin of the Internet itself. As a DARPA project, the Internet was conceived of as a set of redundant nodes running the same communication protocol. Taking a node down would not affect the rest, as the protocol reroutes data so communication among the remaining nodes continues unhampered. Similarly, a blockchain continues to run any app deployed to it even when a node goes down.

Unlike the Internet, however, which is primarily a data communication protocol, blockchains run robust, decentralized operating systems which can process instructions programmed into apps. These apps may constitute games, social media, logistics systems, productivity, and anything else that can be run on a typical computer. From simple crossword puzzles to systems capable of managing global freight networks, blockchains make apps accessible to anyone with a phone or computer.

Beyond a global operating system, the trust technology built into blockchains goes far beyond ensuring the veracity of the network. It introduces the concept of verifiable and unique owned digital content. Digital documents, such as a property title or authenticity certificate, can be assigned to a unique owner. These documents cannot be stolen or counterfeited. They are owned in the truest sense of the term and always accessible on the network.

The post-Bitcoin blockchains tend to use a proof-of-stake model, meaning any entity that demonstrates a big enough investment in the network can run a node supporting the network. Each blockchain using this model runs its own economy based on a unique token, essentially a cryptocurrency. Similar to digital content on these networks, tokens cannot be counterfeited, as each carries a unique signature.

More importantly, the network uses its tokens to reimburse nodes for the real-world costs of running server hardware. In perfect equity, apps on the network incur transaction charges which are paid to the nodes. An entire financial industry has arisen around trading and investing tokens, mirroring the existing financial industry in its mechanisms.

From Crypto to Apps

The second generation blockchains maintained the Bitcoin legacy, focusing on a digital currency and limiting how well they perform as scalable networks. Although they support apps, their performance suffers under heavy demand. One means they use to regulate usage involves raising the transaction charges, just as a transportation authority might raise tolls during commute hours to control traffic congestion.

The Sui layer 1 blockchain was built as a third generation network, combining the learnings from previous blockchains and cloud services. Its distributed computing structure lets nodes add resources to keep up with demand, making it truly scalable. With this model, transaction fees do not need to increase to regulate demand. Nodes increase their capacity, just as a cloud service can dedicate new resources on the fly when a website experiences heavy traffic.

Along with its scalable architecture, Sui incorporates blockchain virtues, such as decentralization, ensuring network resilience. Its data model allows for verifiable digital asset ownership, while moving beyond the limitations of blockchains founded around digital currencies. As a thoroughly modern computing environment, it uses an object data model, where assets can be mutated and their assets stored on the network. In practical terms, that means everything, from a chess game to an NFT, is an object on the network, and each can be changed depending on a smart contract's instructions. Each move of a chess game, for example, mutates the object.

And most notably compared to second generation blockchains, these objects can transform. As an example, if an app on another blockchain could fuse two NFTs into one, the app would need to destroy both original NFTs and create a new one. On Sui, a similar app could programmatically compose two NFTs and give them a different appearance based on the fusion. As the two objects still exist, however, they can be subsequently separated and sold off individually.

The blockchain industry as a whole recognizes not only the need to modernize its computing environments, but also to ease the friction of using the networks. Developers build infrastructure on top of existing blockchains, called layer 2 networks, that fix some of the shortcomings. A recent trend involves letting people use their existing Google accounts to log into blockchain apps, something Sui incorporates at a fundamental level.

Primetime for Blockchain

This iterative process that occurred in the blockchain industry, going from Bitcoin to second generation networks to the current generation, shows the work that has gone into evolving a technology towards mass adoption. As an underlying paradigm of technology development, this process can be seen in everything from infrastructure to consumer electronics. One revolutionary idea undergoes evolution until it becomes globally useful. After 14 years of blockchain development, its time has come.