Blockchain introduces time consensus in computers, where time generates trust, and trust builds social relationships, thereby driving productivity.
What is time?#
Answering a simple question is often difficult. For now, let's set aside the discussion of time in physics. The time we ordinary people perceive is simply the cycle of sunrise and sunset, the repetition of days, and the reproduction of human beings. Here, time is sequential and irreversible, with events occurring in a specific order.
From a physics perspective, time is the change of matter. In physics, the definition of a second is based on the characteristics of cesium-133 atomic radiation. However, I will use an apple to explain what time means in physics. I peel an apple, and after 15 minutes, the fresh apple turns brown due to the oxidation of phenolic compounds. Therefore, "fresh apple" and "brown apple" are two states of this apple, which can also be called time points. The process of turning brown in between can be called a time interval. The concept of "second" can be classified as a time interval. In blockchain, the account state is essentially a snapshot of data, more similar to a time point.
Granularity of time#
The earliest concept of time was simply the cycle of sunrise and sunset, but due to natural changes, the length of daylight and nighttime varies throughout the year. Later, ancient Chinese people divided time into 12 time periods. In the 13th century, mechanical clocks for measuring "hours" appeared in the Western world. We can see that the granularity of time continues to refine. Why do we need precise differentiation of time?
With the appearance of clocks, "time" became detached from natural phenomena and became a measurable unit. Clocks were a key invention that led to the modern industrial era.
——Lewis Mumford
What is the value of time?#
From the perspective of human perception, time is just a concept we imagine out of thin air. What value does it have? It is human labor activities above time that create value, the production of material changes. The difference is that when we return to the question of why we need increasingly refined time, time brings us more efficient cooperation between people, enabling groups to achieve fine division of labor and improve productivity, creating more value. For example, a ferry crosses the river three times a day. Without precise time awareness, passengers would have to arrive at the ferry terminal early and wait for the ferry to depart, wasting a lot of working time.
We often say that time is priceless, but in reality, time has a price, and everyone's time is defined by capital. The average hourly wage in the United States is $28, but how much money would a billionaire be willing to spend to extend their life? The disparity in the world is vividly reflected in the pricing of time.
Blockchain is time#
Time is the sequence of events, the direction of physical changes, and its irreversibility is an important characteristic that brings about serious exchanges and builds trust and markets. Blockchain brings order to the digital world, endowing it with sacred and irreversible time, and the trust it brings builds markets based on blockchain technology. To understand why blockchain is time, you can read the article Bitcoin is Time. In this highly abstract world, it is important not to reinvent the wheel, especially since I cannot create such a good wheel.
How to measure the value of a block?#
The time of an ordinary person and that of a billionaire have different prices. So when we consider blockchain as time, perhaps we can also think from this perspective. How much transaction value can be contained in a unit of time? BTC is the cryptocurrency with the highest market value in the cash world. Compared to blockchain networks with smaller market capitalization, it is as if Bitcoin is the billionaire's time, while Altcoins (such as $LTC) represent the time of ordinary people. People tend to conduct exchanges of greater value on the BTC network, resulting in a huge difference in market capitalization between BTC, which represents the right to use time, and Altcoins, which represent the right to use other public chains.
Investing in public chain coins is investing in the growth of transaction value contained in time#
With the continuous increase in the price of BTC over the past decade, the transactions conducted on this network often contain increasing amounts of value in US dollars. When we talk about a currency or a medium of exchange, the increase in its price is part of the growth in transaction value contained in it. Why does BTC, which mainly serves as a currency for transactions, have a higher market value than ETH, which can perform more functions? Perhaps we can understand this by considering that its price itself is part of its value, as its unit of time can often transfer a larger amount of value. Behind this is the accumulation of more security and consensus.
When we perceive ETH as the right to use time in the Ethereum network, the increase in the intrinsic value of ETH, in addition to the increase in the price of the token itself, comes from the increase in the number of transactions that can be contained in a unit of time. The Ethereum community is now committed to improving TPS, building second-layer networks through Rollup methods, and using oracles to write real-world information into the blockchain, among other things, to enrich the transaction value that can be contained in a unit of time. The underlying growth of Ethereum comes from this. After more than a decade of development, the world has discovered that many industries need the "connectivity" brought by the Internet. Now is perhaps the time to consider what changes "time and sequence" can bring.
Can blockchain bring markets with lower friction costs?#
Centralized timing tools have achieved very high granularity in time division and ordering. When we settle transactions using the SWIFT network, the occurrence time of each transaction can be highly accurate, essentially because centralized institutions maintain a large ledger. The solution to consensus lies in the trust in the political and capital forces behind these centralized institutions, as well as the stable order that arises from the balance of these forces. The consensus mechanism of blockchain is brought about by the randomness in algorithms. If we want to compare the costs of the two markets, we need to examine what conditions are required for the operation of centralized ledgers and decentralized ledgers, and what is the situation in the real world?
Centralized trust market:
- National law enforcement agencies;
- Public credibility established by the government;
- Balance between governments;
- Operating costs of official central banks, clearing institutions, etc.;
Blockchain trust market:
- Utilization of the stable social security, electricity, and network infrastructure of the traditional world;
- Randomness and consensus mechanisms;
- Execution capability of code;
There may be some operating conditions that have not been listed, but from the above items, we can also see that the construction of the blockchain market cannot be separated from the underlying guarantees of the traditional world. The advantage is that the trust market of blockchain is supported globally. In the absence of local guarantees from the traditional world, nodes can be transferred to other regions that provide guarantees, as exemplified by the migration of Chinese miners.
In my opinion, the possible reasons why the existing blockchain market has lower friction costs are:
- Utilizing the underlying guarantees of the traditional world while paying lower costs;
- Nodes compete in the market, which is more efficient than monopolistic bureaucratic institutions.