In the last couple weeks, Eva and I have been spending more time investigating the blockchain, both through literature and an interview with a Wellesley faculty member. We read Ethereum: Blockchains, Digital Assets, Smart Contracts, Decentralized Autonomous Organizations by Henning Diedrich (Wildfire Publishing 2015). This book was recommended many times over when researching literature to introduce us to crypto concepts. The audience of the book is supposed to be non-technical-minded learners. In my post I am going to discuss and evaluate how Diedrich explains Ethereum and blockchain technology, as well as introduce Eva and my discussion with Christine Bassem, a professor of computer science at Wellesley.
Ethereum Diedrich’s entire explanation of Ethereum is vague and in relation to Bitcoin. I found this frustrating:
- because recommenders described this as a great introduction to blockchain technology, and if you don't know about Bitcoin, how will you understand Ethereum? and
- Ethereum clearly has value that is separate from Bitcoin and while the two are obviously related and discussed together a lot, there is inherent value in different cryptocurrencies, therefore Ethereum should be discussed on its own and not in relation to other blockchains.
It makes no sense to me to describe an unfamiliar concept in relation to another potentially unfamiliar concept. Ethereum as a blockchain, Diedrich describes, is for more general use than just payment (Ether is hosted on Ethereum). Immediately it’s clear from reading this how much has changed in the last three years when Diedrich writes that Ethereum has the fastest transaction speed (it’s closer to tenth fastest as of January 14, 2018).
Blockchain Diedrich writes that there is no agreed-upon definition of blockchain. Instead of defining it he lists a ton of characteristics of blockchains. While I understand that people can have different definitions of the same thing, I find it a cop-out to not include a definition; it really seems like he doesn’t know what he’s talking about. That said, lots of descriptions of the blockchain are characteristic-based and not definition-based. Eva started to explain blockchains in week 1’s blog.
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Takeaways from discussion with Professor Bassem, next steps
In contrast to our lackluster experience with Diedrich’s book, Eva and I met with with Computer Science Professor Christine Bassem last Friday to discuss her interest in blockchain technology and Bitcoin. While her formal research interests do not include cryptocurrency, they do include distributed computing and distributed systems. She did a better job of explaining blockchain through a metaphor compared to a money in/money out ledger. She said: the chain is the ledger, the block is the page on the ledger, and the transaction is the line on the page. So, there are individual transactions in the block, and the entire block is the currency, like bitcoin. Professor Bassem also helped us start to understand mining, which we will be studying soon.
The bolded text is a great analogy, it just falls apart a bit at the end where the "currency" is conflated with the "entire block".
Let's leave aside the currency debate for a moment, e.g. is it a commodity, digital asset, currency, token? etc. I'll call them tokens for the moment.
The emission of tokens is governed by rules written in code on the blockchain, so for instance in Bitcoin, miners earn "block rewards" in BTC for successfully mining a block, but the "entire block" isn't the currency. By entire block I presume you mean something like a block that has been included in the blockchain and has enough confirmations from the network to be considered valid. A confirmed block, or a block that is considered 'valid', or 'final', is indeed a new page in the ledger. The tokens which are emitted to reward this block production exist as an entry or entries on the ledger as well.
So, person X gets Z reward for producing block Y. In Bitcoin the block reward is either mined by an individual, very rare, or it is mined by the collective efforts of a mining pool, usual. When a block reward is mined by a pool, the rewards are distributed to those proportional to how much they helped to mine the block / win the lottery.
On Steem, we have dispensed with the mining / lottery method, as it is too inefficient to scale to 100k+ transactions per second, and instead the blockchain is maintained by witnesses, who earn some portion of the total STEEM emitted for their efforts to maintain the network, and content creators share the rest of the block rewards.
So, while both BTC and STEEM pay block rewards to those who maintain the blockchain, and the first ledger entry of these block rewards are recorded in the relevant block, the block is not the rewards. The tokens are 'moveable' simply by updating the ledger, but the block remains, unalterable, non-moving, forever.
I can't wait until you two get to Steem, and EOS! :)