12 Topics, 60+ Tweets, Great Insights
In Blockchain Insights, we collect the most interesting Twitter updates from the overall blockchain ecosystem and present them in perfectly curated lists. At the end of each week, we share a summary of the most interesting discussions. Make sure to sign up for the newsletter once you’ve read the full article 😉
In order to kick this off, we have collected some of the best tweets since Bitcoin’s launch for a number of important blockchain topics. We believe 99% of people in blockchain can learn a lot from these insights and hopefully avoid making some unnecessary, costly mistakes!
Important milestones in blockchain history
Bitcoin was the result of decades of research in cryptography, game theory, and computer sciences. It was also a result of digital cash research & implementations in the 90s and the works of Nick Szabo (bit gold), Wei Dai (b-money), and Adam Back (Hashcash). We have dedicated an article specifically to the history of blockchain.
Hal Finney announced that Bitcoin is live.
— halfin (@halfin) January 11, 2009
The first Altcoin was Namecoin. Litecoin was another early Altcoin that was founded by Charlie Lee and became “Digital Silver” compared to Bitcoin – the “Digital Gold”.
Litecoin has launched! http://t.co/mf4q1fS9
— litecoin (@litecoin) October 14, 2011
At some point, people wanted to enable more than the simple transfer of values. Since Bitcoin is somewhat limited and core developers didn’t want to change the core protocol too much, new blockchain protocols were started. NXT introduced the first PoS blockchain and made it easy to build Dapps based on built-in features. Many blockchain protocols such as NEM, Waves or Ardor follow the NXT vision.
— Nxt (@NxtCommunity) December 14, 2013
Vitalik Buterin introduced Ethereum – the “decentralized global computer” including a built-in Turing-complete programming language – to really enable use cases such as decentralized exchanges, smart properties, smart contracts, and DAOs. Since then, Ethereum has become the dominant smart contract protocol and many new blockchain protocols follow this path.
Vitalik Buterin reveals Ethereum at Bitcoin Miami 2014 – Video + Slides: http://t.co/GZxX1emntx
— Tuur Demeester (@TuurDemeester) February 2, 2014
Even before NXT and Ethereum, J. R. Willett proposed Mastercoin and the first ICO. This concept of fundraising was utilized by many projects ever since and really picked up utilizing ERC-20 Tokens on Ethereum in 2017. The performance of the overwhelming number of ICO projects and the value of tokens is another story..
11/ The Mastercoin ICO: So in 2013, this guy J.R. Willett goes to the bitcointalk forum one day and he says that he has this idea for a supplementary protocol to Bitcoin. He described a protocol that would leverage the Bitcoin blockchain, but would add more features to it. pic.twitter.com/Me8Drx1Eku
— Eric Wall (@ercwl) August 26, 2018
In 2018/2019, the blockchain industry has been going through a phase of consolidation. There were fewer ICOs and fewer partnership announcements but a lot of building. In 2020, there are more than 100 layer 1 blockchain protocols and thousands of Dapps – with few users! The level of adoption is being measured..
1/ We @ElectricCapital fingerprinted more than 20,000 code repos and 16M commits to create a Dev Report on crypto. Analyzed by @MariaShen (better known internally as "Maria Meeker"). Data powered by @jubos. Here are the highlights ⚡️
— Avichal Garg (Electric Capital) ⚡ (@avichal) March 7, 2019
A more recent, very comprehensive report was released by Decentral Park Capital, IDEO Colab Ventures & a large number of industry contributors and can be accessed below.
Over the past 6+ months, together with @taratan and a dozen of our favourite analysts, VCs, data co’s and startups, we’ve been putting together a monster report on the State of Adoption in crypto.
Today we are releasing it into the wild 👉🏻 https://t.co/TQh5mKkkpv
— Elias Simos (@eliasimos) February 5, 2020
On the one side, Bitcoin and truly decentralized blockchains are extremely secure compared to a centralized system with a single point of failure. On the other side, while core blockchain technologies are getting more and more secure, smart contracts, the combination of protocols, and project implementations come with risks.
Cyber security is a nightmare.
Crypto asset security is a 10X nightmare.
Smart contract security is a 100X nightmare.
— Jameson Lopp (@lopp) September 22, 2017
You can not make conclusions from one project for another. Also: DYOR – Do Your Own Research!
"Just because the Bitcoin blockchain and thus Bitcoin have been technically safe and secure historically, this does not mean that other blockchains and cryptocurrencies will exhibit the same long-term reliability, security, and resiliency against attacks." https://t.co/oiiYpsaozK
— Nick Szabo 🔑 (@NickSzabo4) December 19, 2017
You can take self-custody of your finances without being dependent on any third party (bank). You may have heard the saying: “Your keys – Your Bitcoin. Not your keys – Not your Bitcoin”. Note: If you take self-custody, you cannot call somebody to refund your stolen funds. Make sure to safely store your keys and backups.
"Not your keys, not your coins"
Also, having a single person control cold storage at an exchange is monumental (and criminal) negligence on the part of the directors of that company. It either leads to theft or loss, inevitably and very predictably.
— Andreas ☮ 🌈 ⚛ ⚖ 🌐 📡 📖 📹 🔑 🛩 (@aantonop) February 2, 2019
New wallets improve the user experience significantly. However, in this young industry, there is already a lot of money in circulation and constantly at risk if you don’t take precautions. Be aware of scammers!
Using crypto is easy!
You just need:
– 2FA on everything
– Ledger for cold storage
– Key recovery plan
– New browser extensions
– Wallet for phone
– An exchange account
– Know terms like "gas"
Oh & 95% of coins are scams & hackers are always trying to steal your money
— Ryan Sean Adams – rsa.eth 🏴 (@RyanSAdams) May 8, 2019
Security of blockchains should be the #1 aspect to look for.
If the designers of your blockchain talk about "saving the planet", increasing throughput, "compliance", "governance", "democracy", or any other topic more than they both talk & actually care about securing your financial property, run do not walk away from that chain.
— Nick Szabo 🔑 (@NickSzabo4) October 16, 2019
Decentralization of Blockchain
Decentralization is an enabler of blockchain security. Depending on the use case and participants, more or less decentralization may be needed.
Decentralization is only a means towards the key to blockchain value, trust minimization, which brings a host of benefits: immutability, censorship resistance, global seamlessness, monetary and financial sovereignty. Other kinds of decentralization are security theater.
— Nick Szabo 🔑 (@NickSzabo4) October 16, 2019
The significance of measuring decentralization is clear.
— Balaji S. Srinivasan (@balajis) July 28, 2017
There are different types of decentralization and different reasons to aim for decentralization.
I just published “The Meaning of Decentralization” https://t.co/73W8IROdvI
— vitalik.eth (@VitalikButerin) February 6, 2017
An analysis of decentralization must include ecosystem, development, tokens, and technology.
1/ decentralization is a myth. we use "decentralized" without any specificity as to what that *actually* means. let's untangle the idea of decentralization. i developed a basic grid that breaks it down at the protocol, network, and app layer (dated april 2018) pic.twitter.com/pbVd52Qgva
— Meltem Demirors (@Melt_Dem) August 19, 2018
Sophisticated attempts at measuring decentralization are emerging.
Ths is an outstanding piece of analysis and writing. Measuring degree of #ethereum decentralization. @brianbehlendorf…made me think of some of our conversations. Good, academically honest work here. https://t.co/9O6Hz6Qkx7
— John Wolpert (@jwolpert) December 1, 2019
The security of all available systems and their decentralization may ultimately be put to a test.
When the email hosts, the web hosts, the domain registrars, the banks, the payment systems, the censors and the politicians crack down on crypto… only then will we see the true power of decentralization.
— Naval (@naval) March 30, 2018
Bitcoin’s success until today can be attributed to Satoshi Nakamoto, developers & the community.
Satoshi's pseudonymity was as important as Bitcoin's decentralization. They couldn't play either the man or the ball.
— Balaji S. Srinivasan (@balajis) October 23, 2019
Scalability of Blockchains
Scaling blockchain mostly refers to throughput. Scaling blockchain also includes storage and the upgradeability and maintainability of solutions – which has been a challenge due to the “immutability” of state, smart contracts & projects.
Storage costs should not be the most important issue.
If you're doing a project whose goal is to shrink blockchain size at the cost of latency or throughput, you are doing it wrong.https://t.co/CnmwjpvDSi
— Emin Gün Sirer (@el33th4xor) February 25, 2019
Blockchain throughput can be improved through a number of different strategies.
My view: there are basically 5 scaling strategies:
1. Many separate chains
2. Super-big blocks
3. Incremental improvements that don't change security model (eg. replacing txs + sigs with compressed delta + STARKs)
4. Layer 2 (channels and plasma)
— vitalik.eth (@VitalikButerin) June 9, 2018
Layer 1 blockchains are becoming a settlement layer and other protocols shall take off some of the load.
Crucial to this is that with digital tech we can have multiple protocol layers instead of separate kinds of physical objects. Bitcoin the settlement & large payments layer is the "gold"; layer 2s or 3s used for retail are the "silver" and "copper", smaller but pegged to layer 1.
— Nick Szabo 🔑 (@NickSzabo4) August 30, 2019
Some issues must be solved on a core layer and other functionality & scaling must be enabled on other layers.
Base layers and functionality escape velocityhttps://t.co/b3ViQRjIUp
— vitalik.eth (@VitalikButerin) December 26, 2019
So far, the Lightning network and other layer 2 scaling solutions are not much used. At the same time, sharding is being implemented in various protocols and a lot of research is going into Zero-knowledge proofs.
1) Why we need sharding: if blockchain consensus relies on every node processing all transactions + storing all state, the network cannot scale beyond the capacity of a single node.
— Sina Habibian (@sinahab) May 5, 2018
The Web 3 Tech Stack
The tech stack of the future internet is getting more and more clear. It will consist of various components that are interoperable with each other. Some of these components build on each other which is then described as “layer 1, 2, 3”. A brief introduction is available here.
Web 3 Foundation introduced a general Web 3 stack.
What is the #Web3 tech stack and what's in it? We've compiled a list of the major teams working to create the decentralized web. Tons of links, explanations, and graphics so you can better understand #Web3. https://t.co/0JDNoWQ6dl
— Web3 Foundation (@web3foundation) July 24, 2018
Ethereum Enterprise Alliance is showcasing its tech stack including some tools & private chain adjustments.
— All Things Blockchain! (@BlockchainGains) May 2, 2018
Investors are building their portfolio around their new Web 3 stacks.
Today we’re excited to introduce The #Convergence Stack: a refinement to our #investment thesishttps://t.co/I4zgjZ27zc @jamie247 @LawrenceLundy @aronvanammers @theo_turner#blockchain #crypto #dlt #m2m #decentralised #ai #iot pic.twitter.com/I4m4Vif67s
— Outlier Ventures (@OVioHQ) March 13, 2019
In the last 2 years, especially 2nd layer protocols have been emerging as well as better tooling.
0/ About 18 months ago, I published The Web3 Stack
Today I published an updated version – The Web3 Stack 2019 Edition – in English, Chinese, and Korean
Lots of images in this thread!https://t.co/6JuRSaFXQW
— Kyle Samani (@KyleSamani) December 13, 2019
The design of tokens and token engineering must be among the top project priorities. Investors must be able to capture real value besides speculation. Also, projects must be compliant with existing securities regulations.
A clear token framework that specifies the different types of tokens can help with that.
— florian semle (@floriansemle) January 24, 2018
Many disciplines relate to crypto-economics. The engineering of (complex) systems is research-heavy.
New paper on the Foundations of Cryptoeconomic Systems by @sherminvo and @mZargham! Required reading for anyone serious about #tokenengineering. The epistemic base of the field is growing. https://t.co/S0HeAXveqq
— JGBSci🌱 (@gablerjonathan) November 22, 2019
Leading organizations such as the Token Engineering Group & Outlier Ventures have already shared great insights into creating a token and a token ecosystem.
This handbook on Token Ecosystem Creation for decentralized economies is the result of considerable work done over the last few months at Outlier Ventures on token mechanism design that I’m happy to have been a part of.https://t.co/6zMeXfLUxC
— Marek (@RegularMarek) November 8, 2018
The progress in this field has been made step by step over the past years (here: token bonding curves).
The Token Bonding Curve reference list @decentralion put together (https://t.co/H1J6r6f51I) is likely the most complete out there. I was interested in the temporal dimension and made a pro forma timeline of relevant thought leadership and project launches. Comments/edits welcome. pic.twitter.com/nMpOfuSflO
— JGBSci🌱 (@gablerjonathan) May 15, 2020
Ultimately, projects should be enabled to utilize best practices and models out of the box.
I just published New Token Taxonomy Framework 1.0 Overview Video https://t.co/LPDe4kNVkE
— Marley Gray (@HiroMarleyG) December 6, 2019
Good token design, distribution, and token value capture mechanisms may enable long-term sustainable token economies.
Great overview of token design and value capture mechanismshttps://t.co/4ZQX4w1icK
— Slava Balasanov (@team_slava) April 2, 2018
Consensus in Blockchain
Consensus algorithms are a central piece in blockchain to secure the blockchain and maintain its efficiency. Bitcoin’s Proof-of-Work is best-known and tested. Many projects have slightly adjusted and innovated consensus algorithms in the past years. More than 80 consensus algorithms are listed here.
— Cédric Walter (@cedricwalter) August 30, 2019
We are seeing the launch of many new Proof-of-Stake & Delegated Proof-of-Stake systems which incentivize early holders with high staking rewards but there is no clear “winner” of PoS networks yet.
— Messari (@MessariCrypto) May 15, 2020
Governance is one of the biggest issues in blockchain. Best practices have to emerge in regards to leading a decentralized blockchain protocol, controlling community funds & tech developments. Governance processes continuously evolve and are hard to understand from the outside.
A great introduction to the history of governance in blockchain is described here.
I just published A History of Blockchain Governance https://t.co/gsKH5HgSiQ
— Robby Greenfield (@RobTG4) September 18, 2019
Experiments with on-chain governance are interesting but not everything can be solved on-chain.
Formal on-chain blockchain governance is not a panacea, and it's not even clear that it's an improvement.
New article from me: https://t.co/p7FcgBdSUN
— vitalik.eth (@VitalikButerin) December 18, 2017
The launch style and token distribution are crucial.
1) Since @nic__carter analyzed and classified cryptoassets launch styles & funding in his master's thesis, the pace of innovation has been staggering. Buckle up, here is a detailed thread on cryptoassets’ launch styles & funding experimentations since 2009.https://t.co/slZyiS9NCM pic.twitter.com/6dLfEZlvIZ
— Florent Moulin (@fmoulin7) July 23, 2019
The first takeovers and token mergers are happening in 2020.
Super interesting to follow the Steem events. Tron buys Steem, users soft-fork to revoke Tron's governance authority, Tron fights back by collaborating with exchanges to successfully perform a hostile takeover of consensus.
— David Vorick (@DavidVorick) March 4, 2020
Governance tokens are emerging.
Governance is increasingly important as new base layer and protocol networks launch.
Governance tokens are being positioned as monetization for investors in zero-margin #DeFi products.
Can we value them?
— Jake Brukhman (@jbrukh) May 15, 2020
Decentralized autonomous organizations (DAOs) are live.
— DAOstack (@daostack) May 4, 2018
Interoperability is among the hot topics in 2020. Cosmos and Polkadot are rapidly growing their ecosystems while other projects enable interoperability or launch their own concepts. By now, it’s clear that Bitcoin & blockchain won’t be solely used as a payment network but enable various use cases. Interoperability among networks allows protocols to specialize and helps with scaling.
Interoperability is critical for a liquid tokenized world and integration with other systems.
Interoperability between blockchain (and other) ledgers is critical to sustainable growth and building the Internet of Value. This is what IP did for data interoperability, giving us today's internet. Must read post from @_emschwartz. https://t.co/8UxCTJlPMi pic.twitter.com/cvMkaFZB9N
— David Schwartz (@JoelKatz) October 30, 2018
Ingredients for good interoperability are shared here.
#Blockchain Interoperability The Next Frontier.
* Aion Network https://t.co/byMAaZFDKV$btc $eth $eos $aion $neo $trx $ada $nem $atom $xmr $lsk $ltc $xtz $ae $link $vet $zil $icx $wan $zrx $iota $ont $qnt $hot $bnb $Polkadot
— Felipe Barba (@FelipeCrypto) September 17, 2019
An overview of different interoperability approaches is given here.
— Hacker Noon (@hackernoon) October 17, 2019
An in-depth study showcases all major interoperability approaches in 2020 and includes blockchains and connectors. An easy overview is shared below and the full paper is available here.
The State of Blockchain Interoperability in 2020 [An Overview] https://t.co/klTxLGgoN9
— Best Skills (@BestSkills9) June 2, 2020
Blockchain & Privacy
Blockchain and privacy is a delicate matter. On most blockchains all records are visible and it’s possible to track and trace addresses and transactions. However, blockchain can also be part of the solution for private, anonymous payments and even self-sovereign identity.
So, how can we evaluate privacy?
An important essay on “how to evaluate blockchain privacy” by Ian Miers (@secparam) — a pioneering scientist and Zcash founder who has made multiple discoveries in security and privacy: https://t.co/sTR58DkSeu
— zooko (@zooko) January 29, 2019
Layer 1 blockchains such as Zcash, Monero, or Dash utilize different technologies such as ring-signatures, mixers, Tor, and zero-knowledge proofs to enable privacy features.
And if protecting one's identity is highly valued, it's important to understand how each of the top privacy coins operates.https://t.co/rAdYj8hTBG
— Crypto Briefing (@Crypto_Briefing) April 13, 2020
Zero-knowledge proofs can be used for a variety of use cases.
Zero knowledge proofs are transforming blockchain privacy and scalability. If you have some knowledge of cryptography, this piece by Starkware cofounder and Zcash founding scientist @EliBenSasson will get you up to speed. https://t.co/RWEqHLNesL
— Nakamoto (@nakamoto) January 8, 2020
More privacy-preserving technologies are necessary. Nym is working on the infrastructure.
Existing internet protocols leak sensitive data at both network and application levels.
NYM Network is developing the infrastructure to prevent this data leakage and provide people with the best possible privacy.@nymproject built with @tendermint_team
— Tendermint (@tendermint_team) January 16, 2020
ICO, IEO, STO.. what’s next
Blockchain enabled new types of crowdfunding: Initial coin offerings. During the ICO hype in 2017, many projects collected money without a sound token offering & investors got scammed.
There are four main types of ICO's (at least that I'm seeing)
1) Scams (ugh)
2) "Because cutting out intermediaries" (meh)
3) Established company utility token (good)
4) Decentralised infrastructure / Web 3.0 (very good)
— Simon Taylor (@sytaylor) November 16, 2017
Since then, the monthly number of original ICOs decreased. IEOs and STOs were once seen as the next big thing. While they received some attention & some IEOs on large exchanges are successful in fundraising, overall volumes decreased a lot. Some crypto VCs also filled that early-stage gap by investing in tokens & equity.
Do you know when or if it’s best to go for VC, ICO, IEO or other funding? Here are some insights into financing options and how blockchain can close the #funding gap. Why not check it out here: https://t.co/dNu4r3CvxH#ICO #IEO #STO #blockchain #financing #investment #crypto #VC pic.twitter.com/FgnTK1e0FQ
— FullBlock Solutions (@FollowFullBlock) October 21, 2019
Many projects also offer airdrops to promote their tokens and to distribute them widely.
— Hacker Noon (@hackernoon) November 28, 2018
Since unspecific airdrops do not help the cause, projects ask ICO participants and potential token holders to engage in specific actions, for example, they need to “like and retweet” or to lock up tokens.
— ethereum.network (@EthereumNetw) December 28, 2018
New ICO types are being explored such as the IDO..
First of all – what is it? It is basically the next step after ICO -> IEO (initial exchange offering) -> IDO (initial DEX offering)
It is a primary offering of tokens to the public but now instead of using a specific sales mechanism (ICO) or a CEX (IEO) its using a DEX.
— Martin Köppelmann (@koeppelmann) May 1, 2020
the reversible ICO..
Reversible ICO explained!
Read this to understand how it works!
[ Any developers feel free to challenge the code. We will give 10k future LYX as bounty for any significant bug 🤓 ]https://t.co/9cQprSyfnd
— Fabian Vogelsteller (@feindura) April 13, 2020
and most recently the DYCO.
Watch below the clip made by @soniatiosanto to understand the New Generation of #TokenOffering by #DAOMaker.#VentureCapital #vc #investments #technology https://t.co/HxwmxsnPd1 pic.twitter.com/Zf33vyQ3Di
— DAO Maker (@TheDaoMaker) May 21, 2020
Crypto Valuation & Investing
A never-ending story is the valuation of Bitcoin and other cryptocurrencies. People always discuss whether Bitcoin is overvalued or undervalued – mostly without looking at fundamentals or metrics. Bitcoin & crypto in general has evolved into a new financial market that is immature, not fully regulated, and offers uncountable opportunities for short-term and for long-term investors. There are numerous trading strategies from pump & dump schemes to arbitrage, algo-trading, margin trading, and derivatives trading. We cannot list all trading strategies but we highlight important crypto valuation models and some investment theses.
First of all, it’s important to highlight that crypto asset valuation is still work in progress. Chris Burniske has done fantastic work in this field and shared an update on Cryptoasset Valuations.
1/ Published an expansion of the 2017 #cryptoasset valuations piece, bifurcating into cryptocapital & cryptocommodities, two groups with fundamentally different models of value capture: https://t.co/EQQc8bSjmg
— Chris Burniske (@cburniske) April 27, 2019
A good overview of different crypto asset valuation models is presented here.
I just published “Today’s Crypto Asset Valuation Frameworks” https://t.co/vTKriqm9QD
— Ashley Lannquist (@AshleyLannquist) March 7, 2018
Best-known Bitcoin price models are the stock to flow model and the rainbow chart. A comparison.
1/15 Today, I'm comparing the two currently most popular bitcoin price models: Rainbow chart vs S2F!
✅ Tried & tested log regression (2014)
✅ Never changed
✅ Has emoji 🌈
❌ New & complex (2019)
❌ Changes often
❌ Sounds like a sex position
A thread 👇 pic.twitter.com/1Td6pZXPM4
— Eric Wall (@ercwl) April 15, 2020
Some investors share their crypto investment theses and there seems to be a general agreement on the potential of Web 3, open finance & stateless money among crypto investors. Andreessen Horowitz shared their thesis here.
#9 — Read the a16z Crypto Investment Thesishttps://t.co/20xFQBmEHO
— Jason Yanowitz (@JasonYanowitz) April 29, 2020
Multicoin Capital shared their Crypto Mega Thesis here.
6/ At the summit, we proudly debuted our Investment Thesis publicly for the first time: "The Crypto Mega Theses." You can watch the full presentation and read the accompanying post here: https://t.co/0enr8fpgCY
— John Robert Reed (@johnrobertreed) May 2, 2019
Henrik Andersson shared insights into the different opportunities and compared the maturity of verticals with potential value captures.
Crypto markets are evolving fast, I just published 'Investment Thesis Refresh': https://t.co/yGFRrP596O
— Henrik Andersson (@phenrikand) June 4, 2019
Ryan Sean Adams defined the crypto money portfolio. His thesis is that one or more cryptocurrencies will become the base money of a parallel non-sovereign financial system worth trillions of dollars.
Holding the right money is the first step to go bankless
ETH & BTC are the only crypto money that matter
(see for yourself)
The crypto money portfolio:
– Money bets
– Bank bets
– Stablecoin bets
Learn more in today's release of the program:https://t.co/HxftJI5oc1
— Ryan Sean Adams – rsa.eth 🏴 (@RyanSAdams) September 5, 2019
While the outlook looks rather promising for the overall blockchain industry, the valuation of specific layer 1 blockchains, networks and tokens remains challenging. The valuation of DeFi tokens and protocols may be easier because existing models seem to fit better. Note: DeFi is less mature and technical risk must also be accounted for.
How to value crypto capital assets
Using annualized earnings to value the most used DeFi tokens & protocols
Incredible post by @0x_Lucas
— Bankless 🏴 (@BanklessHQ) May 13, 2020