Don't Use a Blockchain Unless You Really Need One Posted on : Jan 15 - 2018

Last month I had the plum assignment of interviewing Naval Ravikant for CoinDesk's Most Influential in Blockchain 2017 series. During our conversation, the AngelList co-founder shared an insight that I just couldn't fit into the profile, but it was pretty mind-blowing, so I'm going to lay it on you here.

Stepping back, for the last few years I've watched the cryptocurrency community's efforts to disrupt finance and, in parallel, the self-sovereign identity movement's attempt to decentralize control of personal data.

By studying the former, I've learned the importance of censorship-resistance – the inability of a third party to veto a transaction between peers. From the latter I've become familiar with the concept of data portability: the notion that consumers should be able to easily and securely transfer their records from one service to another – be it a bank, a doctor's office or a social media platform – the way they can port their mobile number when they get a new phone.

What Ravikant helped me to grok is that these two ideas are tightly related – and so the fact that both digital currency and digital identity projects are employing distributed ledgers is more than coincidence or fashion.

Because you don't use a blockchain unless you really need it.

Despite some of the hype, blockchains are "incredibly inefficient," Ravikant said. "It's worth paying the cost when you need the decentralization, but it's not when you don't."

Walled gardens

Most CoinDesk readers are probably familiar with the usefulness of decentralization in a monetary context (and if you're not, take a look at recent articles about cryptocurrency adoption in Iran, Venezuela, Russia and, ahem, the alt-right). The neutrality, censorship-resistance and openness of a permissionless network mean it will attract the odious along with the oppressed, and the software doesn't decide which is which. View More