The core functionality of blockchains

Blockchains are a lot of things to different people, but I think most fundamentally they can be seen as:

  1. A place where you can post stuff so that anyone can see it and it has a canonical order and
  2. An interpretation of the posted stuff

To illustrate this further, when Alice sends Bob some coins, she has to put a transaction on chain (1) and this transaction is then interpreted as being a transfer of her coins to Bob (2). We can also say (1) is data availability and (2) is execution.

What do we care about

A lot of us talk about security and hardness. So let’s get deeper into the properties that we would want from such a system:

  1. How do you post a transaction to be processed (this is censorship resistance and ordering)
  2. How predictable is the interpretation of this data (this is security)
  3. How will the interpretation of the data change in the future (this is hardness)

The difference between security and hardness is that security refers to the code as it is now, and hardness to future changes. Let’s say that there is a bug in the EVM that allows anyone to create any number of ERC20 tokens; this is clearly against the expectation we have on these smart contracts, and so it would constitute a major security bug.

If instead, say, all Ethereum core devs decided it is a good idea to change the code so that anyone can create any number of ERC20 tokens, and announced this to everyone, and the node operators simply decided to install this update instead of protesting this violation of core principles, this would not violate the predictability of the current code; but it would violate past expectations that the behaviour would not change, and would therefore violate hardness.

Censorship resistance, ordering and hardness are all important properties of blockchains. However, with new learning over the last few years, I think we have to reassess how we prioritize different properties, because the tradeoffs are not free.

Bitcoin established hardness

  • 21 million cap central tenet

Smart contract blockchains are becoming money APIs

  • RWAs don’t require as much hardness
  • issuer always provides security of last resort
  • stability still good but no more central value proposition

Ordering and censorship resistance should become new focus

  • Ethereum so far has taken a very long term view
  • Censorship resistance is seen as a long term property (see, inclusion into blocks with )

Security and hardness still matter

  • security is important for everything that happens on chain
  • hardness should be seen like the stability of the money API
  • predictable, long term changes are ok
  • it’s not about making commitments for decades

Summary – refocus on