Partnered With:

Dialogue with a16z partner: If the Web3 vision is realized, the block space may become an important new computing resource

Read this article in 14 Minutes

The opportunities to innovate and scale up more infrastructure over the next 10-20 years are endless.

Original title: "Dialogue with a16z partner Chris Dixon: "Blockspace" is the best product in the next ten years"

Original source: The Generalist

Original compilation: Katie Koo, Odaily Planet Daily

Bull markets make more money, bear markets learn more.

Understanding blockspaces is fundamental to understanding cryptocurrencies and the Web3 world. This is also to prepare for a potential future market recovery.

Just a few months ago, a16z Crypto partner Chris Dixon called blockspace the "best of the decade" in the 20s product". We had the pleasure of having the Head of Crypto at a16z to explain further why this is said and what we can do about it.

The following is what investors, operators and founders should know about block space.

1. What is block space?

The block space is the space on the blockchain that can run code and store data. The difference with the traditional computing space is that before the emergence of the blockchain, the software always obeyed the hardware, and ultimately obeyed the owner of the hardware. Companies like Meta control the hardware that runs Facebook , so it ultimately controls Facebook.

Blockchains are built in a different way: by using a consensus mechanism, the software is "responsible" for the hardware.

Blockchain entrepreneurs write software code that makes strong promises about the future behavior of the product.

2. This is an interesting expression. I've never seen this discussed before in terms of the relationship between software and hardware, what you're really talking about is control, right?

Yes. Suppose Google issues GoogleCoin. Google claims that there are only 21 million tokens in the world. but drive google Token The software runs on servers controlled by Google. Because Google controls the hardware, and the hardware controls the software, which further controls Token quantity.

Compare Bitcoin. Bitcoin promises that there will only be 21 million million Bitcoins, and this rule is embedded in the architecture (code) of the Bitcoin blockchain. Even if many people running the Bitcoin code (miners) tried to subvert these rules, it would be difficult to do (hardware control is too decentralized).

This is where the block space differs. Developers and entrepreneurs building on the blockchain ecosystem need to know this rule, they will not be controlled like traditional technology companies.

3. What are the most important considerations when designing a block space (manufacturing a public chain)?

Blockspace exists on the blockchain and is designed in a variety of ways. Its most important feature is its security properties. The reliability of the promises it makes is the most important characteristic.

Another important feature is performance. This has to do with the fees paid when transacting on the blockchain. These costs can be reduced by producing better performing systems. Some argue that there is a tradeoff in security for performance. But obviously, security and performance are top priorities. Another issue to consider is the community surrounding the blockchain. Ethereum is an example of a healthy developer community. Other blockchains focus more on speculation and gambling, which I don't think is healthy.

So, on the one hand, blockchains are computers, so their security and performance are important; on the other hand, they are also social networks, which need to focus on Build healthy communities.

4. What is the most interesting and potential way to expand the blockchain and its space?

Blockchain scalability is a hotly debated topic.

Some chains, such as Ethereum, believe that the best way to grow block space is through L2. If they are architected correctly, L2 inherits the security properties of L1 and still has the strong security guarantees of Ethereum. They also provide additional block space capacity on top, and Dapps can run with lower gas fees. There are some great L2s out there right now: Optimism, Arbitrum, zkSync, Aztec , and Starkware.

Another approach is low-level system design. For example, Solana is trying to achieve all scale at L1 .

There is more L1 connected. There are also cross-chain bridges currently available to make chain interoperability, sending assets and messages back and forth feasible.

In terms of which is the best way to increase the block space supply, I personally believe that the three main approaches outlined above can be mixed.

5. In the article "Consensus Capital Market" written by Leo Zhang , Zhang believes that the block space will become "the center of the metaverse commodity". Nothing seems to require scale more than running a parallel universe on-chain. What do you think? Is the metaverse the main scene in the blockspace discussion?

"Metaverse" describes a series of emerging technologies, including Web3, VR, and even the general development of the Internet. The Metaverse can be considered the next wave of the internet.

Will it be controlled in a centralized way by a large corporation (like Meta), or will it be decentralized like the early internet?

In the case of decentralization, control will be held by a group of developers, creators and other community participants who operate by common standards. Blockchains will be extremely important as a way to set the rules of the network, hold assets and virtual goods, and store other shared information. Blockchain is the first way to have "country" data on the Internet. From a computer memory perspective, this data is owned by the community, not the company.

I think block space is an emerging and critical computing resource, which is juxtaposed with traditional computing resources such as bandwidth, storage, and computing. If the vision of Web3 is realized, block space may become the most important new computing resource in the 20 2000s.

6. The analogy we are currently using is based on traditional computing, what do you think about other frameworks? For example, some argue that block space should be considered a commodity like land, oil, or grain. Will the block space also have a trading market? To what extent will we see this new species being financialized?

In my opinion, most of the block space is non-fungible, which will limit its financialization.

Financializing block space can be a challenge. While block space is sometimes thought of as a commodity like oil or grain, it may not be easily financialized. This is because blockspace has different characteristics depending on the chain it is on. This non-fungibility may limit the creation of a true blockspace transaction market.

I would like to see some innovations to help block space auctions be more efficient and fair. There are already gas auction systems that financialize block space on a single chain such as Ethereum.

From a broader perspective, there will be a series of chains. Different chains will have different communities, and generally there will be no cross-chain fungible assets.

7. You mentioned the improvement of the auction, what are you most interested in recently? Where else do you see opportunity?

We have been focusing on core L1 innovations. For example, we are involved in several projects spun out of Meta that have interesting distributed system innovations. As a method to improve the performance and privacy properties of blockchains, zero-knowledge proofs have also made good progress, and we are actively investing in them. L2 also has many interesting developments. The cross-chain bridge that connects everything together is also important.

We still need to improve the experience for new users. There are tons of inconveniences around wallets, custody, key recovery, and key management. Demand for better security and performance is also increasing.

I expect blockchain to follow a common pattern of previous waves of computing: There will be an ever-strengthening feedback loop between infrastructure and applications. As more applications are created, so do the demands on the infrastructure. This will unlock new applications as the infrastructure gets better. Economists call this "induced demand." That's why when you build another lane on the highway, there tends to be more traffic; people build more shops in the area, which attracts more traffic. A similar dynamic will emerge with blockchain.

In the next 10 to 20 years, the interest and opportunity to innovate and scale up more infrastructure will be endless .

8. You once said, "Blockspace was the best product sold in the 20 2000s." What does that mean? What signals should other builders and investors take from it?

Selling block space will be a good business in the 21 20 century as in the 20 century ;sold PCs and broadband in the 90s and early 2000s, as well as mobile phones in the past 10 years.

Blockchain is finding its super application. Following the internet crash of the early 2000s, many questioned the need for all the bandwidth that had been built up in previous years. How much does it matter just to get emails faster? And in the mid-2000s, apps like YouTube made sense of even greater bandwidth, opening up further innovations. Blockchain and blockspace may be in a similar situation, with a breakthrough on the horizon.

We are currently entering a financial recession, perhaps similar to the early 21st century. But now is the time when we are entering the golden age of entrepreneurship. Time to figure out what would be YouTube or Netflix using block space? What killer apps will drive this computing wave forward? These apps may already exist, and we don't have the answers yet. That's what makes this period so exciting.

(Note: None of the above should be considered a16z Investment advice.)