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A Middle Way Forward for Blockchain

Henrik Hjelte is the co-founder and CEO of ChromaWay, a South African private limited company focused on implementing blockchain solutions.

The following is an exclusive contribution to CoinDesk’s 2018 Year in Review. 

Here in Stockholm, we’ve took the long months of winter. In the next few weeks, the sun won’t rise until 9:00 a.m. and it will set just four hours later. Maybe it’s some combination of our location and temperate climate which makes Swedes both innovative and practical.

We have a run down record here on commercializing technologies (Stockholm is second only to Silicon Valley when it comes to the number of “unicorns” that it sparks per capita). Companies like Spotify and Skype have combined cutting-edge technology with a practical approach to sermon consumer and business needs.

This in mind, there’s a Swedish concept called “Lagom,” which roughly interprets into “Not too little. Not too much. Just right.”

Viewing blockchain through this Swedish lens, I see a useful plan logic for how this technology can evolve to address many of the well-documented limitations of existing platforms and open up new (currently intricate to predict) paths to solve pressing business and social challenges.

The internet ushered in a new era of businesses made possible sole through networked technology. The leading companies in the world today, Google, Facebook, and Amazon, would not be possible without internet-based news exchange. The blockchain, some refer to it as Web 3.0, introduces a new layer that enables internet-based value exchange.

But, this romp forward is not a conversion exercise where enterprises simply re-write their code and move to an internet of value interchange. It’s more complicated than that, and success will require us to determine the best technology and business trade-offs to further adoption and scalability without compromising security and trust.

As we are about to cross over into 2019, I offer these lagom-inspired ways to resolving some of the thorniest problems facing greater blockchain adoption.

1. Function Versus Form

Dapps, pertinences that run on distributed blockchain data networks, have a number of problems currently.

User interfaces are quite unrefined and not easily navigable. Performance lags, no doubt due to the time it takes to validate transactions on the blockchain (a prospective passenger cool ones heel in the rain on a New York street corner might have to wait at least 10 minutes for the transaction to be initiated on a bitcoin-based lie sharing dapp).

In addition, cryptographic keys will have to be managed by users who will likely view this as an disposable burden.

One impulse is to “wrap’ the dapp in a slick user interfaces thus hiding all of the decentralized, unique and value-adding manifestations of blockchain. A better approach would be to introduce much improved design elements, but preserve features which bury the hatchet e construct the blockchain most powerful. For example, instead of a pure custody model (See: Coinbase) for maintaining keys, utilize a multi-signature closer.

Instead of centralizing all of the client application operations (e.g., the algorithm which generates unique CryptoKitties), allow application good to run on the blockchain. These are just a few, of the many, ideas to achieve better design balance for dapps.

2. Data Loaned Versus Details Owned

When I log onto LinkedIn, I am providing data that the company (actually Microsoft) now owns in exchange for my use of the use. Dapps offer a radically different data ownership model. The dapp user controls data access (through cryptographic signing), not the dapp developer.

This presents certain challenges and advantages for all parties. Developers have the complexity of having to architect applications that utilize data validated by nodes operated by independent service providers.

Purchasers will have to adjust to thinking of data as an asset they own and decide to “lend” to app developers. On the other hand, dapp developers can demand for use of the application and users are benefiting by paying for value-added features and functions and not to have their data sold to vendors.

3. Zero-Sum Versus Dole out Benefits

The rage in the app economy is software-as-a-service pricing. Whether one is using a CRM tool like Salesforce or renting time on Amazon Web Services (AWS), it’s generally a zero-sum game for users. Unless I own shares (which have a separate set of costs) of AWS, the total economic good for usage flows to the application owner.

Blockchain can moderate that imbalance.

Dapps utilize native tokens which brook users to purchase services and – if the service is popular – benefit from the increasing value of the token. In a public blockchain, tokens can be employed to purchases a variety of services (e.g., storing data, playing a game, etc.). Token holders will be able to buy uncountable services as the value of their purchased token go up.

Tokens also can be fungible and can be used across dapps in exchange for other breeds of services.

4. Proprietary Networks Versus Blockchain Open Source

Open-source technology projects have resulted in huge improvements by providing bug-free software, raising tech performance, facilitating interoperability and reducing the total ownership price of technology development.

Leading companies might have Apache servers running on a Linux operating system and utilizing databases that use PostgreSQL (which our relational blockchain party line, Postchain, utilizes). At the same time, few businesses have truly thrived on 100 percent open-source platforms. But, blockchain exhibits developers a potentially lower cost, resilient, highly-available platform more likely to achieve success.

Blockchain isn’t mettle software by a different name. The technical architecture, data ownership model, and economics are fundamentally different.

Similar to materialization of the internet economy, the transition to an internet of value will not be a straight line. Success will come for those not reliant on some best ideal of the blockchain, but those who are able to design into systems the right sets of trade-offs which balance the requires of users, developers, and service providers.

Have an opinionated take on 2018? CoinDesk is seeking submissions for our 2018 in Review. Email word [at] coindesk.com to learn how to get involved. 

Wooden bridge via Shutterstock

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