The Significance of Social Consensus in Blockchain
Blockchains are remarkable technologies, yet what I believe to be their most crucial strategic asset lies in the social consensus and ecosystem built around them. This social layer is significant, though its importance varies across different blockchains.
Understanding Layer 0 and Community
I propose that the “Layer 0” of any blockchain ecosystem primarily serves one main purpose. By “Layer 0,” I refer to the communities that fortify these networks, encompassing enthusiasts, engineers, developers, investors, venture capitalists, and volunteers. As open-source public networks, the success of each ecosystem heavily relies on its community support.
Contrasting Bitcoin and Ethereum Communities
Despite their surface similarities, the Bitcoin and Ethereum communities and ecosystems are fundamentally different. I’ve often stated, “Bitcoin is the asset, and Ethereum is the platform.” The social consensus surrounding each blockchain is what keeps them cohesive and uniquely positioned for their specific missions.
Bitcoin: A Scarcity-Based Store of Value
Bitcoin stands as a scarcity-based store of value, superior to fiat currencies and more reliably scarce than gold. It remains unaffected by political influences and is backed by a robust proof-of-work network. Bitcoin constantly wrestles for recognition against other cryptocurrencies and traditional fiat currencies.
A Zero-Sum Game in Cryptocurrency
The cryptocurrency market operates as a zero-sum game. Allowing for multiple cryptocurrencies to exist as stores of value poses risks, as it could lead to an infinite number of copies of Bitcoin. Currently, no other cryptocurrency even comes close to Bitcoin’s value, with assets like Litecoin and Dogecoin making up a mere fraction of Bitcoin’s market cap.
Ethereum: A Positive-Sum Ecosystem
In contrast, Ethereum is a “world computer,” fostering a positive-sum environment where building and extending functionalities is encouraged. Its ecosystem thrives on engineering and development, establishing dominance in tokenized assets and stablecoins. With over 100 Layer 2 networks, Ethereum significantly outpaces other ecosystems.
Future Insights and Cultural Divergence
Both Bitcoin and Ethereum have passionate communities that diverge from mainstream narratives. Bitcoin is evolving with Layer 2 solutions, while Ethereum shifts towards being both a computing platform and a scarce asset. Ultimately, the distinct cultural requirements of these ecosystems may hinder them from excelling at multiple functions simultaneously.
