Would a centralized public blockchain have value?

The very purpose of the blockchain technology is to avoid any one point of failure by decentralizing the consensus algorithm, and hence it seems that a centralized blockchain may be of interest in some private organizations, but would not evoke interest from the public.

The blockchain trilemma is often denoted as the problem of how one can achieve scalability, decentralization and security at the same time. Hence, one often have to compromise between these factors, and seek the best balance given the purpose of any specific blockchain project. However, reducing any of these factors to virtually zero would dissolve the purpose of blockchains.

A centralized versus a decentralized public blockchain could be compared to the difference between intranet and internet. Tim Berners-Lee, who invented the Word Wide Web in 1989, first envisioned it as a kind of intranet at Cern. What allowed for this invention to change the world was its ability to scale the spread of information globally. Blockchain technology could potentially scale trust (contracts, value, identity) and governance (smart contracts), but just like a private intranet, a centralized blockchain would lose trust, and therefore also its main purpose. The reason being that if a public blockchain has one point of failure, given any value, this central unit would be a major target for attacks. So even if there were no humans involved in this centralized control, the blockchain would not be trusted. Consequently, a centralized blockchain would have no, or very low, value for the public.

One possible way to achieve scale while remaining decentralized is so-called second layer solutions, as we see in the Lightning Network on the Bitcoin blockchain. However, the development of such off-chain scaling is often a laborious and time-consuming process, and most blockchains are very far from the 24000 transactions per second (TPS) VISA performs. The team behind the Ethereum blockchain has built a roadmap, which could lead Ethereum to reaching similar levels in 2020. Transitioning from the proof-of-work (PoW) to the proof-of-stake (PoS) algorithm is a crucial element in this process. A PoW blockchain allows for faster validation, as the security consumes less time and energy. The technology called Zero-Knowledge Scalable Transparent ARguments of Knowledge (zk-STARKs) allows for verification of the data without revealing the content to the validator. This could also be crucial in allowing validators to randomly verify blocks after they have been temporarily added, hence allowing for increased scale. Off-chain scaling could also be done by employing a second-tier blockchains as extra data layers. The team behind the Ethereum blockchain tries to amend the current situation of Ethereum being able to serve only 7–11 TPS on average. One main reason why the Ethereum blockchain is so slow now, is that it is basically full. As a short-term solution, before Ethereum 2.0 is built, the founder of the world’s second-largest blockchain, Vitalik Buterin, stated that the Bitcoin cash (BCH) blockchain could serve as a temporary storage system for Ethereum. However, such a solution is temporary, and in this case would only be realistic if the community of the BCH blockchain would welcome the use of their blockchain for this purpose.

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