# Blockchain

- [A blockchain is a decentralized [[Databases|database]]](https://www.youtube.com/watch?v=bBC-nXj3Ng4).
  - A blockchain is a worse database. It is slower, requires way more storage and compute, doesn't have customer support, etc. [But has one dimension along which it is radically different. No single entity or small group of entities controls it](https://continuations.com/web3crypto-why-bother).
- Blockchains solve the Byzantine Generals Problem: [How do participants in a decentralized network communicate and coordinate with each other towards some action without relying on a trusted third-party?](https://a16z.com/2019/11/08/crypto-glossary/).
  - Blockchains are "trustless". There are mechanisms in place by which all parties in the [[Systems|system]] can reach a consensus on what the canonical truth is.
  - Power and trust is distributed (or shared) among the network's stakeholders (e.g. developers, miners, and consumers), rather than concentrated in a single individual or entity (e.g. banks, governments, and financial institutions).
  - Blockchains put the code in charge.
  - Blockchains allow permissionless innovation.
- Blockchains are useful when these conditions are met:
  - The resource is scarce (limited).
  - Fungible (there isn't a difference between two items. eg. storing files). All the coins are mutually interchangeable.
  - The resource can be provided by a lot of people.
- Smart contracts can be defined as code that's replicated and executed on all the blockchain nodes.
  - You can encode "incentives" in a smart contract that will be enforced by the code. This drives behavior.
- Smart contracts allow permissionless composability. [Composability allows anyone in a network to take existing programs and adapt or build on top of them, it unlocks completely new use cases that don't exist in our world](https://future.a16z.com/how-composability-unlocks-crypto-and-everything-else/).
- [Blockchains could replace networks with markets](https://twitter.com/naval/status/877467629308395521).
- [They can be thought of as social and economic laboratories because they're great for experimenting with novel concepts at scale](https://x.com/binji_x/status/1891929209737470024).
- One of the main downsides of blockchains is that most humans are not good at protecting their passwords, credentials or private keys.
- Blockchains can be used to ensure the best output in prisoner's dilemma style interactions. Write a smart contract that does X when everyone has added the money and no one will be able to betray.
- Blockchains solve distribution problems but they don't solve the problem of who will add the money to the ecosystem. That's a political one. Unless there are good incentives to move to blockchains.
  - Once a system moves to a blockchain, it'll get its properties (e.g: transparency and verifiability).
- Open source has the failure mode of not enough incentives, cryptocurrency has the failure mode of excessive and overly concentrated incentives.
- Blockchain incentives have large real world undesired second order consequences. E.g: Bitcoin incentivizes miners to use a lot of energy.