The unfair releases and pyramidal wealth structures of previous cryptocurrencies has led to more expensive fees for developers than should currently exist.
The blockchain of the future will not be the one that raises the most capital initially. It will be the one that reaches as many hands as possible.
A new wave of blockhain developers means a new market opportunity for existing cryptocurrencies. By far the most effective crypto at recruiting new developers has been Ethereum (and more recently, EOS). With buzzwords like “dApps: decentralized applications”, “smart contracts”, “initial coin offerings”, and a number of other side projects, it can be difficult to find any reason to doubt the churning machine that is Ethereum (and now, EOS).
Ethereum sold roughly 85% of its total supply to 5,000 investors in a small, not widely advertised pre-sale. EOS did the same, and people bought it, WTF. While there are a lot of subjective reasons why we believe this pre-sale will poison Ether and EOS over the long-term, there are real, objective consequences to this pre-sale that a number of new blockchain developers who I speak with are unaware of. This pre-sale has created a significant barrier to entry into the world of Ethereum smart contracts, but you likely won’t read anything about it until you’ve already prepared to launch your coin.
Unlike what many of the Ether and EOS docs imply, dApps aren’t just regular applications hosted in a “decentralized” way. When you run a regular application, generally you have one dedicated server, sized perfectly to your company’s needs and running code with minimal financial repercussions. Obviously, you can modify this code without an additional fee, because it’s on a server you control. On a decentralized network, however, even simple server modifications need to be propagated across thousands of nodes. For the purposes of application development, think of each node as a server. Instead of having just one server, you have 1000s – which means every change you make costs money in the form of Ethereum fees.
Computationally, and thereby, financially, a simple change to a database should be 1000s times more expensive in a dApp then in a regular database. On a network where wealth is evenly distributed, this price increase actually isn’t that bad.
But on Ethereum, wealth is not evenly distributed, not in the slightest. Instead, simple database changes carry fees with them, often in the range of $0.50 to $2.20, with similar fees for modifying your code. Developing for Ethereum is REALLY expensive – even more expensive than it should be if we were to run 1000 servers ourselves.
Ethereum is more expensive than it should be because its pre-sale has created an environment where there is an unsustainable distribution of wealth in the underlying protocol’s coin. Companies that raised hundreds of thousands of Ether in their pre-ICOs are prioritized by the network’s fee system over newcomers. Consider that raising $10,000 in Ether today might only cover fees for 5,000 of your dApp’s database changes, while $10,000 raised during the Ether pre-sale would cover roughly 60,000,000 database changes for your competitors. Although these competitors may have an application that serves a different purpose than yours, they are still your competitors on the Ethereum network for things like processing time and strength of computation. If your app shows any measure of profitability, these existing wealth structures have the power to fork your product and resell it in a much more efficient manner, because they have orders of magnitude more ether than you. Whoever can pay the higher fee to the decentralized structure owns the network, and Ethereum, with its quiet pre-sale of more than 85% of its total supply, is insanely more unbalanced in its wealth structure than any other open financial system on the planet.
The unfair wealth structure has created a fee structure that is unsustainable. While 0.01 Ether is dust to older companies who bought in early, it’s a significant barrier to innovation for new ones. The hoarding of Ether causes an unnecessary fee spike among the active older smart contracts that prevents new ones from taking hold.
Pre-sales, and more broadly private-turned-public blockchains, are bad for everyone because they limit long-term adoption of the network. They are a bad business decision financially because they don’t take into account secondary and tertiary growth phases – two phases that a cryptocurrency has yet to achieve. The blockchain of the future will be the one that touches as many people as possible, not the one that raises the most capital.
For a blockchain-like system to last, it needs a fair distribution of wealth — or at the very least, one that consists of far less than 80% of a coin’s total supply. Ideally, the network’s wealth grows proportionally to each new identity on the network. Each identity can receive only one “new member” bonus, although on traditional blockchains, this can be difficult to enforce.
Being able to recognize each new member as an individual provides a new way of thinking about blockchains, which is why Project Oblio is built on a spiritchain, not a blockchain. Each human spirit contains a unique, bioelectric human aura that Project Oblio utilizes in constructing the network. Read more about our protocol here.
Pre-existing smart contract blockchains have a lot of capability for sandboxing. But most reasonable people outside of crypto don’t want to join an “old boys” club of wealth, especially when they don’t have a financial incentive to. And if developers can’t afford to innovate on your network, that’s even worse.
The Ethereum developers have begun working on the Rinkeby test network, a scalable network similar to Project Oblio, with the exception that only a privileged number of persons (based on online identities) are allowed to confirm transactions. Because these identities are based on online accounts, they can easily be faked, meaning a person or group of people financially incentivized can easily overtake the network (as we’ve seen with fake news on Facebook, etc.). Using the Rinkeby network without a live biometric to confirm each user is a BAD idea for developers.
Block.One raises $4.3 billion and locks exchanges from withdrawing/depositing EOS. Then the markets crash.
Perhaps the “ECORP” of crypto is not as much Ethereum as it is EOS. EOS used its connections to Steemit to maniuplate an undereducated blockchain populace into effectively investing in nothing — no guarantee for developments, no guarantee for anything except a market crash (at least initially).
Ethereum set the precedent that basically allowed everything in this blog post to come true, in the form of EOS.