BTC vs. ETH: A Victory for Positioning

Editor's Note: This article comes fromOrange Book (ID: chengpishu)Editor's Note: This article comes from

Orange Book (ID: chengpishu)

, by jessewldn, published with permission.

Let's look at a picture first. The reason why the Internet today has Ele.me, Douyin, Taobao, WeChat, and all the rich applications and services that change people's lives are all based on this picture.

This is the protocol stack of the Internet. Each section is a very important innovation, and more importantly, these sections eventually form the most important infrastructure of the Internet today.

In "The Four Ages of Blockchain", I said that Bitcoin is a calculator (single-purpose computer) and ETH is a general-purpose mainframe, which represents a more scalable blockchain that will Bringing a new era of "application servers", and eventually turning into a highly scalable, composable, decentralized "cloud service".

This judgment now appears to be obviously wrong. The biggest problem is that this view assumes that blockchain is a linear innovation process, and subconsciously believes that each new era of blockchain will eat away at the previous one in terms of scale and internal integration. era.

If you look back at 2014, one of the most popular views of Bitcoin at that time was that Bitcoin was the native payment method of the Internet. But it's clear that Bitcoin's throughput is not enough to support Internet-scale payment needs. If you firmly believed in the positioning of payment at the time and waited for the upgrade of Bitcoin to increase throughput, then you may have missed the new role of Bitcoin as a non-sovereign value store and digital gold. In this new position, Bitcoin's throughput and scalability are less important.

Similarly, the positioning of Ethereum, the early popular view was "world computer", which led many people to think: 1) Ethereum can replace Bitcoin because it has better programmability; 2) Can Ethereum achieve The criterion of success lies in whether it can be accepted by more people, so the question becomes, whether the scalability and throughput of Ethereum can reach the level of Internet scale.

The second point is actually a particularly dangerous assumption, because it is easy for people to come to a wrong view, that is: the next generation of smart contract platforms are the killers of Ethereum, just because these new public chains provide higher scalability and throughput.

This is also wrong. Just as Ethereum did not kill Bitcoin, a new generation of high-performance decentralized computing platforms may not be able to kill the leader, Ethereum. The most important utility of Ethereum today is not computing, but liquidation as a "world accounting system".

DeFi and DAOs are emerging use cases that take full advantage of Ethereum as a battle-tested, slow, but sufficiently secure computer that makes it ideal for developing "new token-based and applications of new assets such as crowdfunding, lending, self-organization and voting.

Even if network congestion leads to high gas fees and delays of several minutes or even hours, these types of applications still beat the traditional world of going to a bank to seek a loan, call a shareholder vote, or form (or dissolve) a LLC User Experience.

The next step in the blockchain—that is, the era of "application servers" and "cloud services" that truly belong to blockchain computing—is less likely to kill Ethereum, and more likely to open up other adjacent ones. Possibility, use the unique functions of this chain to provide support for another bunch of applications with different attributes.

The application chain built through the Cosmos SDK (a bit like the server built by yourself in the blockchain era) is not the same as Dfinity, Polkadot and ETH 2.0 chains. The latter adopts a top-down design, through a basic chain To ensure the security of the entire network, it is more like a cloud computing service in the blockchain era.

These different architectures and designs may end up each serving different types of applications. Add a few layers of new services, such as privacy, storage, layer2 scalability, node SaaS, hosting services, wallets, etc., and we will slowly start to have a rich, thick, multi-layered, composable network similar to the Internet protocol stack.

Of course, this analogy with the Internet must be imperfect, but if you hope that a certain blockchain can grow a complex protocol stack alone, fully expand, and break out of the encirclement, then you can easily miss these chains in specific application scenarios. However, the explosive potential here is tantamount to ignoring the significance of the continued existence of "specialized division of labor" in a continuously developing and powerful technology stack.

After that, projects that are currently in competition may become interoperable with each other in the future.

But that’s not to say that Bitcoin or Ethereum have won their respective positions forever. There are still many problems to be solved or optimized. But with only modest upgrades and maintenance needed (such as addressing the state explosion problem in ETH 1.x), Bitcoin and Ethereum already have a path for continued growth. And in their higher layers, there is more room for innovation.

A more advanced new technology does not necessarily backfire on the use cases of the lower-level protocols under it. On the contrary, it will generate a more complex dedicated protocol stack on the basis of existing protocols. Based on these independent different technologies, the space for innovation above is much larger than what we currently know.