Photo: Coin Telegraph
In an article, Koinos Group CEO Andrew Levine emphasizes people’s daily use of social applications and yet, despite the popularity of blockchains, none of these social applications are decentralized. With two blockchains, Ethereum and Steem, as a reference, Levine sheds light on this.
Ethereum, despite the high number of developers compared to any other general-purpose blockchain, has not managed to build a social application with mainstream adoption.
On the other hand, Steem was, at one point, one of the most widely used blockchains and one of the most used social DApps in the world. Its market capitalization reflected this all-time high — about $2 billion.
“Steem was able to grow extremely fast and onboard hundreds of thousands of ordinary users but never received the level of developer adoption that Ethereum did and ultimately failed to live up to its potential. How and why this happened is a valuable lesson about building both DApps and blockchains,” Levine writes.
Ethereum: A general-purpose blockchain
At the time of Steem’s development, Ethereum was the only viable blockchain that a developer could use to build their app without having to modify the code of an existing blockchain like Bitcoin.
Because of Ethereum, developers could just write up the code needed for their application instead of having to build a blockchain from scratch. Then, they could upload it to the Ethereum blockchain as a “smart contract.” This allowed developers to ride on the work already done by the Ethereum developers and focus on their application.
Levine highlights, “Allowing developers to upload code to the blockchain created infinite possibilities, including the possibility to upload code that uses up all the network resources making it useless. Some limit had to be imposed on this ‘limitlessness.’ To solve this problem, Vitalik Buterin invented ‘gas’ — a decentralized system for charging a fee to execute code on a blockchain (Ethereum).”
Levine called the fee-based design of Ethereum “brilliant” and said that it set the direction of design on general-purpose blockchains for a decade, after nearly every subsequent blockchain implementing some variant of gas.
“The genius of Ethereum is that it gave developers access to a limitless (‘Turing complete’) programming language. The genius of gas is that it created a decentralized limitation on what developers could do with that language. It is this underlying conflict (limitless v. limited) that explains why there are still no mainstream social DApps on Ethereum,” Levine said.
The Steem developers took a different approach than Ethereum. A very basic blockchain (a “framework”) named Graphene was built, and it could easily transform into a specific social blockchain (an “application-specific” blockchain).
The Steem developers also experimented with a fee-less system for regulating network usage, fundamentally different from gas.
Many initially thought that Steem was a scam during its first launch after announcing a fee-less “bandwidth” system. Because Bitcoin and Ethereum had fees and was on the way to dominate the industry, people believe that a blockchain without fees was bound to fail.
Still, Levine comments, “While the bandwidth system Steem launched with was far from perfect, by offering social features and allowing users to transact for free, Steem quickly became one of the most valuable blockchains in the world, and by far the most used … but it ultimately never really competed with Ethereum.”
Smart contracts rule
Levine highlights that Steem never rivaled Ethereum because Graphene, the blockchain framework it was built on, lacked smart contracts.
“Graphene made it easier to launch blockchains with specific features, but it was by no means ‘easy’ and changing those features or adding new features was incredibly difficult, unlike Ethereum, which allows any developer to upload any code they want, whenever they want,” Levine explains.
In his article, he concludes, “From this perspective, the solution becomes obvious. If we could combine the fee-less system developed for Steem with the flexibility of a blockchain with smart contracts like Ethereum, we could give developers the best of both worlds enabling them to create free-to-use applications with the freedom to add new features whenever they want! Simple, right?”