DAC Economy
  • DAC Economy
  • Table of Contents
  • Introduction
  • Part I
    • Superpower is a curse
    • Scale-out vs. Scale-up
      • The Scale-out Path
      • The Scale-up Path
    • Blockchain Scalability
  • Part II
    • Economics vs. Economy
    • Chaos is a Ladder to Many Skills
      • Let's cure the economic digestive disorder
      • Entropy, Life and Blockchain
    • DAC Economy - The Metis Way
      • Trinity vs. Unity
      • Repurposing DAO to align the stars
    • To Adapt is to Innovate
  • Part III
    • DAC Gardeners Need Bees to Grow a Garden
      • Side-Effects
      • Bees At Your Service
    • Square Peg in a Round Hole
      • Trade-Offs and Compromises
      • Split Concerns Across DAC Dimensions
      • Dynamics of Decentralized Security (Safety)
    • Information is not a Time Machine
      • Arrow of Time and Embodiment of Value
      • Embodiment of Decentralized Incentive and Decentralized Identity
      • Token Engineering vs. Value Engineering
    • Metamorphoses of DAC Economy
      • The Metaverse vs. The Dacmos
      • Simulation Hypothesis vs. Decentralized Cosmogeny
      • Reputation, Oracles and Bridges
  • Epilogue
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  1. Part I

Scale-out vs. Scale-up

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Last updated 3 years ago

We must correct a misconception about an economy relative to size. Many think that economy is about sheer size – many consider blockchain economy, or just Bitcoin economy alone, to be fully established because they already passed the trillion dollar threshold in terms

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⁷ Bitcoin whitepaper is titled

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of size¹⁰. This logic is problematic. Some billionaire’s net worth is more than the size of economy of some countries – but a billionaire is not an economy. An economy is not only about size, it is also about people and what they do (and can do) in that economy.

A single application can become an economy – if its network and ecosystem contain vibrant and diverse social and economic behaviors – in other words, not merely size in dimension but also size of dimensions, matter.

Which brings us to another blockchain specimen, Ethereum.

Ethereum has implemented what is considered full-blown on-chain smart contract (Bitcoin’s version is limited comparably). Smart contracts bring rich functionality to the blockchain world – finally it looks like we can build a truly vibrant and diverse blockchain economy with the help of on-chain smart contracts. Problem solved? Again, not so fast. The problem is, the Ethereum blockchain has the same fundamental characteristics and similar consensus protocol construction as Bitcoin – it shares the same curse with Bitcoin and all first generation decentralized blockchain protocols – which means it can’t be scaled out easily.

Solving this scalability challenge became the first priority for the blockchain community, though many forget the other side of the curse – the barren economy curse, mentioned earlier.

Two paths had been taken and pursued by the blockchain community at large with various efforts – the scale-out path, and the scale-up path.

Bitcoin: A Peer-to-Peer Electronic Cash System.
Financial Technology.
Bitcoin Revisionism.