CommPRO Editorial Staff
Thomas Carter, digital securities pioneer and CEO of DealBox, outlines two key trends that will bring about massive opportunities in the blockchain space in this new year.
Key 1 – The Fat Protocol & Next Generation Blockchains
Joel Monegro’s Fat Protocol thesis describes how the value of blockchain technology is based on an opposite paradigm to the way value was created via the internet over the past couple of decades. The protocol layer of the internet (HTTP, FTP, SMTP, etc) which is the technology that provides the underlying mechanics for websites, file transfers, and email isn’t where the value was created.
Instead, the apps that used the protocols (Facebook, Google, Amazon, etc) were the winners. Thus, the “thin protocol” designation.
In the Blockchain ecosystem we see the inverse is true where value creation will be realized by the market cap of the underlying blockchain protocol as opposed to the apps being built on it. In other words, the value in the Ethereum blockchain can be expected to be more than the dApps (decentralized apps) being built on it. Fat Protocol.
This thesis holds true only if the blockchain in question has solved the TPS (transactions per second) or throughput problem. 1st and 2nd generation blockchains like Bitcoin and Ethereum rely on consensus mechanisms that put a huge drag on transaction speed making them unviable by enterprise adoption standards. 3rd generation blockchain is all about increasing transaction speed without compromising the security, immutability and distribution of the chain.
Key 2 – Usability
Blockchain is different from the traditional internet in that it incorporates a shared data layer rather than data being siloed and monetized by companies like Facebook, Instagram, Reddit, etc., For those companies, the better model would compensate the users for creating the content and empower them to take their content elsewhere if a better deal became available. With data decentralized, security would be much better and privacy would be better protected.
That’s exactly what a decentralized application built on an open data protocol would do. And the compensation of the users is what a native cryptocurrency token would satisfy in this new business model.
Why isn’t this being done en masse? Bitcoin is now over a decade old. Bitcoin miners have been incentivized by receiving tokens and that is precisely why Bitcoin works as well as it does. The model is proven.
Source: Blockchain Wire