Proof-of-Work Doesn’t Solve Every Blockchain Use Case

The Bitcoin white paper was published 11 years ago today, on Oct. 31, 2008, meaning that Bitcoin (BTC) is celebrating its 11th year of existence. From its humble beginnings to over a $300 billion market capitalization in 2017, the success of Bitcoin is truly a remarkable accomplishment. 

What is Bitcoin? A question with many answers. Digital gold, magic internet money, a hedge against macro risk, tulip mania? One thing is for certain, Bitcoin found a product–market fit as a new form of money owned by the people. The Bitcoin brand is well known around the globe, the userbase is growing fast, and it continues to attract developers to the ecosystem. 

However, Bitcoin is not a panacea. When Satoshi first launched Bitcoin, he made design choices that were optimal for becoming a hard money with a limited attack surface at the cost of base-layer scalability and an expressive scripting language. One of those major choices was to implement a distributed proof-of-work (PoW) system to form network consensus. In other words, Bitcoin is great at being money but not very good at all the other potential use cases for a blockchain. 

The lesson here is that design choices come with tradeoffs, and Bitcoin has already cemented its path. This leaves room open for alternative blockchain architectures to capture value in a different market — such as supply chain management, enterprise software, social media, voting, prediction markets and more. 

Nonfinancial applications for a blockchain 

Money is an important use case for a blockchain, but that is just the tip of the iceberg. Let’s walk through a few alternative use cases for a blockchain.

Supply chain management

A blockchain can be used to create a shared database that tracks the provenance of an item from raw materials all the way into the consumer’s hands. This is currently being tested in the fair trade industry and by grocery stores looking to prevent the spread of contaminated food. 

Prediction markets on a blockchain


Source Link