Blockchain Network Types | Jack Saba

So the term blockchain would suggest that there is only one ever-growing record of information. There are thousands of blockchains out there, and they can be grouped into 3 categories: public, permissioned, and private. And what those terms denote is who has the ability to be a user of the network and who has the ability to be an operator of the network. So Bitcoin, for example, Any one of us could take our computer, spin up a node, and now we're an operator of the network. Any one of us can go onto an exchange and buy a Bitcoin, and now we're a user of the network. So these things are completely public, anyone has access to them. Permissioned blockchains require the authorization to operate the network, and you have to be a known individual to use them. So this is something like the healthcare industry would use. So you don't need us to operate the healthcare system, You would have different hospitals, different physicians, different regulators in these insurance institutions. They would all operate the healthcare's blockchain, and then in order to be a user of them, you would be a patient at someone's doctor's office or at a hospital. So known individuals operate the network, and you have to be provided access to it. And then private blockchains are where one entity owns the network, And you have to be known to them. So these 3 types of blockchains create trade-offs between anonymity, efficiency, immutability, and transparency. So in public blockchains, anonymity, immutability, and transparency are incredibly important. But efficiency is where we lose some time. So Bitcoin transactions are only added once every 10 minutes. If you send a really large transaction, sometimes it takes up to 2 hours to validate that transaction. But what you have is the ability to operate anonymously. Permissioned blockchains, since you have known institutions and known individuals, anonymity is not as important. They're more concerned with immutability, so you can't change the records, and you can efficiently send the records. Private blockchains are where all institutions go first. All the banks, all these guys, the first time they hear blockchain, they're like, I want to own the IP, I want other people on my network, I want this, I want that. And that's not where the value of this stuff comes from. Honestly, in so many use cases, databases are better than blockchains. Blockchains are really good where you need to have multiple people reading and writing the same information and sharing information back and forth in a very seamless manner. Yes?

Why Ethereum isn't private?

Ah, good question. So Ethereum is a public blockchain, but you can create private networks on top of it. So an example of that I don't know the current name of their company, they switched it, but it was the Small and Medium-Sized Business Exchange. So they were a place for Main Street businesses, small businesses, to get loans from, from a peer-to-peer market. Since they're a financial institution, if ISIS decided to spin up one of their nodes and operate part of that network, they would be in trouble with FinCEN. And so they created a private network so they can control who operates it, But what they do is they put information to the public blockchain so that they get the security of a public blockchain. All, almost all public blockchains have a token with them, because what you— these tokens act as an economic incentive for people to operate the network. So we're running nodes and validating transactions, we need to be paid in some way, that currency is a good way to be paid. But as you get into permissioned, since you know everyone, you don't necessarily need a token to operate the network. So tokens are not always necessary with blockchains. Okay, so we've grown up with the internet. It just works for us, right? Like we don't— I'm streaming Netflix on my flight over here from Boston. It's amazing how good it is. But in the early '90s, you couldn't attach a photo with an email. It just, it had not scaled that much yet. So with any startup, with any new technology, it goes through this general lifecycle that you guys will all go through with your company. Well, I'm going to use the example of Uber really quickly to describe these. So Uber starts in Chicago, and he's got this hypothesis that strangers are willing to get in the cars with others to get to where they're going on an effective basis. So what he does is he calls all his friends and he says, hey guys, for the next 2 weeks, anyone that needs a ride, let me know, I'll pick you up. And then he gets his friends on to do the same thing. And then they start finding some real drivers. They prove out this idea in a very minimal viable product way that people are willing to get in the cars with others. And they said, all right, this worked in Chicago, let's bring it to Boston to find— figure out if this really works in cities. They get there, they figure out how to get drivers on, they figure out how to create awareness about it, and they realize that people in New York love taking this service. So they found the right product-market fit. Now they're like, okay, let's figure out how we go into Boston, D.C., and Philadelphia. So they go to market, they figure out how to seamlessly go to market, they refine these processes, and then eventually they grow, they scale. The majority of blockchain companies are here, almost all of them. Very few of them have reached any level of maturity. So if you're building a blockchain startup, you're building on something that's very immature. You're building on something that's still trying to find its product market fit. So the majority of companies live in this minimal viable product stage. EOS, which is one of the big Ethereum competitors, just sent its mainnet live. So it just pushed a live product to the community. Something that people have been talking about for years and have been really excited about for a long time just went live. So the majority of these products are very early. So then we're going to get into a couple of use cases. Does anyone have questions right now?

Yeah. What stage do you think you guys are in?

We're very MVP. Yeah.

So why is Bitcoin at the top?

Down at the bottom. Growth stage.

Why are they the only one in that category?

Because they've been around the longest. They've established the largest network effect and they've figured out or we as a community have figured out how to get Bitcoin into people's hands. And maybe they're honestly at the, they might still be at the go-to-market stage, but I think that out of any of these, they are the most mature network with the strongest network effect. Yes?

What do you think about the rating process of EOS?

The what?

The rating process.

I think EOS is interesting. I think that I'm not completely sold on them as a network, and I don't know enough about their rating process to be able to speak to that, but I think that they're an interesting competitor to Ethereum. That doesn't answer your question, and I'm sorry. Yes?

So I don't know if I'm even asking the question the right way, but so is Bitcoin and Ripple, like Ripple and all of these different concepts and different plans then, or?

Yeah. So they compete on different utility. So Bitcoin's value, utility, what it's used for is a store of value and a transfer of value. That's really what it's good at. Ethereum is much better for building applications on top of it and for enterprise solutions and things like that. Ripple is basically Bitcoin but for institutions.

But it's all different game plans. So Bitcoin— Ripple does not work in the same way that Bitcoin does. No. So those are all different game plans you have to learn.

Yes, and they all do different things. So if you're building a blockchain company, You want to evaluate what problem you're addressing, how you're designing your solution, and then figure out the best blockchain for what it is that you're doing.

What's the name of the lion?

Brave. Brave. So this is awesome. I was going to get into this a little bit later, but we'll jump in now. So I despise advertising. Screws up everything on the right side of your screen. If you're listening to music, it interrupts your music. It's awful. So Brave created a browser, and it was by the founder of Mozilla and JavaScript. So this is like a real team. This is a real quality product. And by default, they blocked all advertisements. So now you don't have to deal with any advertisements. Their next iteration allowed you to opt in to view advertisements, and they changed the model of the way people get paid. So before, advertisers would pay publishers, And that was kind of the end of it. So Brave found a way to track and monitor how much attention you're spending on advertisements, and then they pay the platform and they pay you. So their token's called the BAT, the Basic Attention Token. So now you have a reason to view advertisements and you can make money on that.

What's the difference between a token and a coin?