Every day there is something new and exciting in the crypto industry. Recently, Coinbase dropped a powerful campaign advert with the essence of “Changing the System”. From afar that sounds preposterous and nuanced. For an industry insider, this was a great campaign covering the mission. Seeing this macro narrative sparked some spontaneous vibes to write several of my principles on why I am in blockchain.
This will be an aggregation of my beliefs ranging from the domains of cognitive psychology to system theory. Let’s begin by talking about what makes someone believe in something or at least develop a reason for a viewpoint. For any specialized reasoning, there must be a specialized context. By life background, I am referring to the collective of one’s psychometric and peripheral standpoint. Basically everything from innate personality behaviour and cultural upbringing to the last thing one saw on Netflix. I believe that my life background has positioned me to be in this industry.
Introspectively, I gravitate to crypto because my personal attributes and life circumstances are adjacent to what this industry stands for. To define those principles, I’d say it’s a collection of sovereignty, intellectualism, competency, and accelerationism, which can be further categorized into segments of technology, economics, political science, finance, sociology, psychology, and other domains.
Before Crypto
Before joining crypto, I was trying to build a proof of education protocol based on what you learned on the internet. I did not go to university because I felt like I could educate myself on the internet. There’s no doubt that information has been commoditized but there is no internet learning system as an alternative to traditional education. Someone who went to an Ivy League school will be perceived as someone who could have the same level of knowledge but was an autodidact. Instead of going to school, I decided to launch a couple of ventures. Some did better than others but each venture was a progression in judgment and experience. My most ambitious idea in the startup world was Lirn.io and the attempt was to create an internet learner identity. You can read about what I envisioned here.
My initial idea was to create a platform that would be similar to YouTube but built around learning. Attempting to build this, I started learning about the tech stack of product development such as cloud architecture, software engineering, databases, and everything else that takes part in providing a product. Around this time, I kept hearing about blockchain and I decided to take a look from a tech perspective. I had previously heard of Bitcoin and even bought some when Coinbase only listed Bitcoin, Ethereum, and Litecoin, but I never dove into what made it special. Needless to say when I looked at blockchain from a technological standpoint I had a paradigm shift in what type of product we could build. We could build a proof of education protocol that is powered on the blockchain. Instead of having all of your data siloed platform to platform, you could now have all your educational data on your crypto wallet. Let me give an example of how this looks. You know when you create an account on a social media platform you have to put your email, password, and username. When you go to another platform you have to create an account again? Well, that’s because each platform has its own database and they can’t talk to each other. All the data your account has can not be brought over to another account in a new database. With blockchain, all the data gets shared and embedded in. So if you make an account on the blockchain, you can go platform to platform while carrying all your data. This was monumental for education. Imagine if you learned something on platform A then you go learn something else on platform B, then platform C says you need certain data from platform A and B to use platform C, it is all possible on the blockchain. This abstraction is a paradigm shift because universal accounting metrics for education can be created, required, and verified.
I was dedicated full-time to building this through the support of my parents, letting me live at home, and to EDD because the government was sending stimulus checks. (S/o Mexican parents for not kicking their kids out when they turn 18). There did reach a point where I needed to be more stable on finances so I decided to look for a job and build on the side.
However, thanks to the experience I got from building I was able to get my first external career move. I’ve never said this before, but my first full-time job was paying me over 6 figures. Not saying this to be ostentatious but rather to showcase there is an alternative way to educate and develop yourself through the internet to start your career. I interviewed with a handful of companies before joining the US team for the layer one blockchain TRON. My official title went from Marketing Manager to Sr. Marketing Manager to Partnerships Manager but in reality, it was a mixture of strategy, marketing, operations, research, and business development. At this point, my entire life revolved around blockchain. Most of my waking hours were spent learning as much as I could about this industry. It got to the point where I would say I was obsessed with blockchain. It felt like the majority of my thoughts revolved around blockchain due to its eclectic nature.
After some time I had a sober reality that I could not continue building Lirn and have a full-time job. I lost to the market and had to shut down the company and was no longer a founder. My identity for several years can be stripped and smashed into smithereens. I haven’t written much of it because it was a deep wound that took me a while to heal from. More than anything it was because of how hard it was to let go of the vision. I believed in a different future. A future where an internet learning system exists and allows for autodidactism to be the booming engine that accelerates us humans to new depths of knowledge. Being a mission-based founder that creates a successful venture is one of the hardest things someone can do and I was now one of the statistics that didn’t make it.
Even though my dreams were crushed, I landed parachuted into an industry that I could transition my mission into. In some way, I like to believe that the essence of Lirn can still succeed but we are still building the system needed to support it. This is because blockchain is still an emerging piece of tech that is slowly swallowing the market. I am a believer that markets are a utility consensus mechanism for what is deemed collectively valuable. Blockchains are not valuable enough to get most of the world on them but they will be. If you reverse what blockchains are made of, you will see that it is a combination of several systems but the three most powerful are civilization, economics, and technology. Civilization allowed for people to coordinate. Finance allowed for scaled coordination around an extrinsic vehicle of value. Technology allowed for the advancement of coordination capabilities. You may notice that I am saying coordination a lot and that is because from a macro lens, we are partaking in some type of system design.
System Design and Theory
This might be an oddball but I want to give an overview of the domain of System Design. There are a few things in my life that I consider to be powerful enough to change the way you view life. Understanding system theory is profound and I want to get across its impact. It’s the matrix of matrices.
In system design, some components lead to processed outcomes. By definition a system is “a set of things working together as parts of a mechanism or an interconnecting network.” Furthermore, I’d categorize systems into three sectors: Objective, Subjective, and Theory systems. For example, an objective system is of our body being made up of cells and atoms. A subjective system is cognition and mind. A theory system is a combination of subjective and objective components such as Math. Math is objective based on its functionalities but is subjective because it is not empirical. The way I understand that one plus one equals two is different from the way you understand it. It is theory because we both get the same conclusion (objective) but the process to get there is different (subjective). It’s the same as seeing a color. We both can identify what is green but what my green looks like could be different than the way your brain renders green.
Theory is the reason we have reusable rockets, create mini black holes, mutate genetics for cures, and do other mind-bending realities because we have been evolving generations of information. On top of that, humans can have a population of over 8 billion. No other living species has such progressive capabilities. The reason we advance is that every generation that passes evolves the current epitome of a domain. Humans are gods of the Earth because we use tools and coordinate well to create new systems. We have man-made systems such as linguistics, alphabets, law, math, code, and others.
Internet
One of the biggest systems is the Internet. The internet, undoubtedly one of the largest and most influential systems ever created, represents a monumental leap in human communication and information exchange. Its inception and widespread adoption have fundamentally transformed society, reshaping how we interact, do business, access information, and even perceive the world. As a vast network of interconnected computers and servers, the Internet has evolved into a global platform that supports an ever-growing range of activities and services, making it a core pillar of modern life.
At its core, the Internet is a system of systems, a complex web of protocols, networks, and technologies that work together to facilitate seamless global connectivity. Its impact is profound and far-reaching, touching nearly every aspect of our lives. It has democratized access to information, breaking down geographical and social barriers, and enabling instant communication across the globe. The rise of the World Wide Web, social media platforms, and e-commerce are just a few examples of how the Internet has created new realms of interaction, commerce, and community.
Moreover, the internet has become a foundation upon which new systems are being built and integrated. These systems range from cloud computing infrastructure, which offers scalable and efficient computing resources, to the Internet of Things (IoT), which connects billions of devices, embedding intelligence into our physical world. The internet has enabled the emergence of big data and artificial intelligence (AI), allowing for the analysis and interpretation of vast amounts of information to improve decision-making and create new insights.
One of the most significant systems being built upon the internet is blockchain technology. Blockchain introduces a new layer of functionality — a secure, decentralized ledger that can record transactions and data transparently and immutably. This technology extends the internet's capabilities from a medium of information exchange to a platform for value transfer and trustless interactions. Through blockchain, concepts like decentralized finance (DeFi) and digital identities are becoming realities, further expanding the internet's role as a foundational system for modern society.
I’d put blockchain as a new system theory that is fusing the internet, humans, and money. The way our future ancestors are going to coordinate is going to be in completely different mechanisms than what we’re used to. Technology has disrupted our lives time and time again and it is not slowing down.
Blockchain will be the baseline information system that humanity will use for coordination. The internet system was the layer that captured information but blockchain is now introducing the layer that is capturing value.
Money, Info, Connections
The inception of Bitcoin marked a pivotal moment in distributed systems, breaking the ice and laying the groundwork for a new understanding of money and value on the internet. Bitcoin, as the first application of blockchain technology, showcased that it was possible to create a decentralized digital currency, operating independently of existing systems such as traditional finance and government fiat-based currencies.
What made Bitcoin revolutionary was its ability to solve the double-spend problem without needing a centralized authority. Utilizing a decentralized network of nodes and the underlying blockchain, Bitcoin ensured that each digital transaction was unique, secure, and immutable. This was a groundbreaking concept because it challenged the conventional financial systems by proposing an alternative where trust is placed in a cryptographic, algorithmic process rather than in central banks or governments.
The emergence of Bitcoin catalyzed a broader discussion about the concept of value in the digital age. It introduced the idea that value could be stored, transferred, and managed entirely digitally, without the need for physical representation like coins notes, or traditional financial intermediaries. This concept extended beyond mere currency, suggesting the potential for a variety of digital assets and tokens, each with their own unique properties and applications.
A consensus mechanism is a foundational aspect of blockchain technology, enabling distributed systems to agree on a single version of the truth or state. Even in the absence of trust between participating parties, which is a paradigm shift. It's a set of protocols that ensures all participants in a decentralized network agree on the validity of transactions and the current state of the shared ledger. The mechanism is crucial for maintaining the integrity, security, and continuity of the blockchain.
A consensus system validates transactions, ensures consistency across the distributed ledger, and protects the network from fraudulent activities like double-spending. There are various types of consensus mechanisms, with Proof of Work (PoW) and Proof of Stake (PoS) being the most prominent. PoW, used by Bitcoin, involves miners solving complex cryptographic puzzles to validate transactions and create new blocks. In PoS, validators are chosen to create new blocks based on the number of coins they hold and are willing to "stake" as collateral.
The consensus mechanism leads to immutability, which is the characteristic of blockchain that makes it nearly impossible to alter past transactions. Once a transaction is confirmed and a block is added to the blockchain, changing it would require not only altering that specific block but all subsequent blocks. This is because each block contains not just a set of transactions, but also a reference (hash) to the previous block, creating a chain of blocks. Altering any single block would change its hash, and this discrepancy would be immediately noticeable to network participants, who would reject the fraudulent block.
Moreover, in decentralized networks like Bitcoin, altering the blockchain would require an enormous amount of computational power to override the consensus of the entire network. This would involve redoing and solving the PoW for each block, a feat that becomes increasingly difficult with each new block added – a concept known as the network's hash rate. The combined effect of these factors – the linking of blocks, the computational power needed to change them, and the decentralized verification by numerous network participants – ensures the high degree of immutability of blockchain transactions.
In essence, the consensus mechanism is not just a way to reach an agreement on the state of the ledger; it is also the bedrock that ensures the integrity and immutability of a blockchain, making it a trustworthy and reliable system for recording transactions.
I view Bitcoin as the genesis chain that marked the first phase of blockchain technology, serving as a decentralized ledger that revolutionized digital transactions by introducing secure, transparent, and immutable record-keeping without the need for central authority.
Ethereum
As we know though there are lots of systems, not just for money. Ethereum jumped a significant shift in the blockchain paradigm, transcending Bitcoin's foundational concept of a decentralized ledger by creating an onchain state machine.
A state machine is a system that updates itself based on actions or state changes it experiences. It consists of a set of defined states, transitions that dictate the shift from one state to another, and inputs that trigger these transitions. Each state in a state machine represents a particular condition or status of the system, and the machine can only be in one state at a given time. The transition between states occurs based on specific rules or inputs, making the state machine a powerful tool for managing dynamic and complex systems.
In blockchain, a state machine is used to keep track of the network's state - for instance, the balances of all accounts in a cryptocurrency network - and to determine how state transitions (like transactions) are made and validated, ensuring consistency and integrity throughout the network.
As a state machine, Ethereum introduced a dynamic layer of functionality and complexity to the blockchain universe. It wasn't just about recording transactions anymore; Ethereum's architecture allowed for the execution of smart contracts, self-executing contracts with the terms of the agreement directly written into code, stored and replicated on the blockchain.
This innovation brought a new dimension to what could be achieved on-chain. While Bitcoin laid the groundwork for decentralized finance by enabling peer-to-peer transactions without intermediaries, Ethereum expanded this concept to include state changes on the blockchain.
This was due to the introduction of smart contracts which are self-executing state changes. They are a fundamental innovation in blockchain technology, providing a way to automate changes of information on the blockchain.
Blockchain Evolution
The evolution of blockchain technology, particularly its ability to incorporate and secure vast amounts of information, has given rise to a complex challenge known as the blockchain trilemma. This trilemma addresses the difficulties in achieving three key properties simultaneously in a blockchain network: scalability, security, and decentralization. As blockchains began to store more information and serve more users, the interplay and potential trade-offs between these three properties became increasingly apparent.
Originally, blockchains like Bitcoin focused primarily on security and decentralization. Security ensures that the system is resistant to attacks and fraud, while decentralization eliminates single points of failure and control, distributing authority across a wide network. However, as the usage of blockchain increased, the need for scalability – the ability to process a high volume of transactions quickly and efficiently – became a pressing issue. Scalability is crucial for widespread adoption, as a system that can handle only a few transactions per second is not practical for global, everyday use.
The trilemma emerges from the inherent difficulties in optimizing all three properties at once. Increasing scalability often requires changes that can affect a network's level of decentralization or security. For instance, larger block sizes can handle more transactions but may lead to a more centralized network, as fewer participants can afford the resources to run full nodes. Similarly, enhancing security measures can sometimes reduce scalability or require a degree of centralization to implement effectively.
As blockchain technology continues to evolve, finding a balance among these three crucial aspects – without significantly compromising any – was a central goal and a challenging task for developers and the blockchain community. Various solutions and approaches, including layer-two solutions, sharding, and different consensus mechanisms, are being built to address the blockchain trilemma, aiming to create networks that are secure, decentralized, and scalable enough to support global, mainstream applications.
The evolution of blockchain technology has led to the development of specialized blockchains, each tailored to address specific needs and challenges, such as scalability, interoperability, and efficiency. This specialization reflects the diverse and growing demands of the blockchain ecosystem.
One notable example is Solana, which introduces parallel execution of transactions. This design significantly enhances the network's throughput and scalability. Solana's architecture enables it to process a high number of transactions simultaneously, reducing bottlenecks that typically slow down traditional blockchains. This makes it an attractive platform for applications requiring high-speed transactions and low latency.
Another innovative approach to scalability comes in the form of layer-two solutions like optimistic and zero-knowledge (ZK) rollups, exemplified by platforms such as Arbitrum, Optimism, and zkSync. These technologies work on top of existing blockchains like Ethereum, bundling multiple transactions into a single one. Optimistic rollups assume transactions are valid by default and only run computations in the event of a challenge, while ZK rollups use cryptographic proofs to ensure transaction validity. Both methods significantly reduce the strain on the underlying blockchain, increasing its capacity to process transactions more efficiently.
Celestia represents a stride towards modular blockchain architecture. It separates the consensus layer from the execution layer, allowing developers to build customized blockchains with greater flexibility and efficiency. This modular approach simplifies the blockchain development process, making it more accessible and adaptable to specific use cases.
Inter-Blockchain Communication (IBC) protocols, such as those used by Cosmos, play a critical role in enhancing interoperability among different blockchain networks. IBC enables the transfer of information and value between distinct blockchains, fostering a more interconnected and versatile ecosystem. This is crucial in a landscape where multiple specialized blockchains exist, as it allows them to communicate and leverage each other's strengths.
The ongoing evolution of blockchain technology marks a significant leap in the system design through which humanity coordinates and exchanges value, akin to the transformative impact once brought about by the internet. However, unlike the internet, which revolutionized information sharing, blockchain introduces a decentralized mechanism that fundamentally redefines value exchange. This new paradigm shift positions blockchain as a pivotal technology for future societal and economic structures, much as the internet did for communication and data exchange.
New Coordination System
Blockchain's evolution towards solving the trilemma of scalability, security, and decentralization through specialized solutions like Solana's parallel processing, layer-two rollups, modular architectures like Celestia, and interoperability protocols such as IBC, demonstrates its potential to create a universally accessible, efficient, and secure platform for value exchange. These advancements ensure that blockchain can support a wide range of applications, from financial transactions to complex, decentralized applications, catering to global, mainstream needs.
In this new system design, blockchain stands as a cornerstone technology that enables a level of decentralization previously unattainable in traditional systems. It shifts the paradigm from centralized authority and trust in institutions to trust in cryptographic algorithms and network consensus. This shift not only enhances security and transparency but also democratizes access to financial and digital services, making them more inclusive and resistant to censorship.
Moreover, blockchain's ability to facilitate direct peer-to-peer interactions without intermediaries revolutionizes how value is exchanged and contracts are executed. Smart contracts automate and enforce agreements in a trustless environment, opening up new avenues for decentralized finance (DeFi) and beyond. This is not just a technological advancement but a societal shift, enabling more equitable and efficient economic models and empowering individuals and communities.
The reason I started building on blockchain was to create an internet learner identity and a proof of education protocol and the exposure to that opened my eyes to the capabilities of the new system. I now see a new future where we update the system to be more robust and dynamic to empower people. If AGI is solved, AI agents will most likely coordinate with crypto as it is native to them. This new system will be global and internet-centric which is what is required for the new level of coordination. The creation of a new system is happening before our eyes and I am proud to be part of it.