I was forwarded an article this week that included an honest appraisal of launching a new product on the Ethereum platform. The initial benefits of selecting Ethereum are clear, it offers a layer of abstraction and simplification over blockchain technology, while providing the scale required for security. But there are also downsides to building on this shared platform. As a result of their experience, the company is the article is now contemplating a move to an alternative technology, and they are not the only ones. A change in technology will represent a costly delay of investment in their products growth.
In times of accelerated innovation and early adoption it’s important to fully assess the potentially business impacting dependency you create through the technology you select.
Many of us monitor the Cryptocurrency markets on sites like CoinMarketCap.com and watch the price of Bitcoin, Ethereum, Ripple and others move like stock market shares. For many technology companies Ethereum is not an investment, it’s the currency required to power the infrastructure that underpins their Business. Operations on Ethereum are powered by Gas. As Gas is purchased in Ethereum, the price of Ethereum has a direct impact on the cost of using the infrastructure, which in turn has a direct impact on the cost of powering their business.
Imagine if your electricity costs had increased at the same rate as Bitcoin (+3,716.31% in the last 2 years ), or the cost of your internet connection next month was unpredictable?
The Canadian company CryptoKitties created quite a stir in December last year when after their game received global news coverage they saw a huge spike in demand. Pending transactions on Ethereum increased six fold, and at one point CryptoKitties accounted for over 10% of all of Ethereum network traffic. Other users of this shared infrastructure experienced longer confirmation times, and as transactions compete to be processed based on the Gas Price offered, a significant increase was required if you wanted to ensure your transactions were executed quickly. A company that has no relationship to another, in a completely different industry, instantly changed the costs for another company to do business.
How do we plan for an uncertain future?
Some of you may have heard of the concept of ‘Late Binding’ – a phrase that can be traced back to the 60’s where it referred to the process of looking up arguments in a computer program at the point where an action was being performed (the performance impact meant it was far from best practice!). When I talk about Late Binding I often use the example of a swimming pool. Specifically the solution required for getting in and out of the pool. A designer could choose to create concrete steps as part of the pools design, to attach a ladder to the side of the pool, or they could choose to create a portable ladder that can be lowered into the pool when needed**. The latter being an example of ‘Late Binding’. You created a solution to solve the problem of getting in and out of the pool, but you now also have a solution for paining your ceilings. It’s a solution that you created before you knew the problem.
I try and apply this type of thinking to every problem, and its one of the reasons that on choosing Ethereum for the DigitalTown CityShares we opted for an ‘invitation only’ proof of authority model and a design, that should we choose to, would allow us to seamlessly migrate to another underlying Blockchain technology without impacting our users.
You may be asking at this point how you build your product without selecting a technology – and of course, you can’t. But there are companies that are creating platforms that enable the speed to market of Ethereum, but that support multiple underlying blockchain infrastructures. As your application interfaces with a Blockchain independent technology, you are are able to move between underlying Blockchain technologies without changing your application. It’s a bit like when we moved to Virtual Machines that meant we no longer cared about the physical hardware.
I have been recently been working with Robert Mao, CEO of Arcblock, who has architected a solution to this problem and who are currently hosting a Token Private Sale. Arcblock has introduced the concept of an ‘Open Chain Access Protocol’ which enables any application to connect to multiple blockchain protocols. This means that when developers build on the Arcblock platform they have the freedom to evaluate blockchain protocols and switch between them without any significant changes to their application. With the blockchain technology landscape moving at pace that is comparable to the early days of the internet, these types of solutions will enable all of to get our product to market without incurring significant technical debt as technologies evolve.
#DigitalTown #CityShares #Blockchain #Arcblock