Side-Effects
Last updated
Last updated
A traditional economy is stratified: they have at the bottom the production strata – essential material products (metal, oil, grains, cattle) and layered on top of those the manufactured products (machines, clothing, buildings, food); on top of the production strata we have the service strata – such as trading, transportation, entertainment. The stratified economy can be abstracted through the concept of side-effects – the service strata are side- effects of the production strata. This abstraction is helpful because the idea of side-effects among economic strata can be applied to computer systems as well as the blockchain economy.
From an economic point of view, consensus mining can be seen as a production economic activity and its product is the consensus block – an essential product to keep the blockchain alive. Unlike a traditional economy, consensus mining is the one and only production activity within a blockchain system. There is no other production activities on-chain[16]. That’s why we say first-gen blockchains do not have a true economy of its own – aside from crypto-mining, most so-called cryptocurrency cottage industry activities are centralized and can be regulated off easily by the centralized institutions. Most first-gen blockchain systems do not have a complete stratified decentralized economy – they stop at the consensus block production (mining) strata and have not developed a truly decentralized service strata on top of the consensus production (mining) strata.
Maybe except for Ethereum.
Today we are all familiar with modern digital computers. When you go build a PC⁵⁵ you know what components you need: CPU⁵⁶, memory module, hard drive, keyboard and mouse, display, for instance. It was not always so – computing devices may not be interactive at all. Non-interactive computers can process batch programs and be rid of input devices such as keyboard and mouse. If we abstract further, imagine we have programs prestored alongside CPU we can even get rid of storage devices such as memory modules and hard drives. When a computer system only processes fixed program(s) it can be said to be pure – it is pure in the sense that no uncertainty is brought in or out of the system. Obviously there will be no side- effects associated with a pure system. But side-effects are indispensable if we want our computer to be useful in our daily life, e.g., writing e-mails, watching movies, listening to music and playing video games. Side-effects are disorder (uncertainty, randomness, etc.) brought into a system to make it impure but vibrant and useful.
If we compare the rigid, one-trick only consensus mining blockchain system to the noninteractive pure computer we can definitely see the similarity. So to strap on side-effects to the blockchain we need some new device – this is what Ethereum brought to the blockchain world – smart contracts. There are special kind of smart contracts that even act like input
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devices on computers, called oracles⁵⁷. With this device and the ability to produce side-effects, Ethereum became the first blockchain system to have a service strata in its ecosystem. There are some interesting specimen in the Ethereum service strata, e.g., DeFi[18].
Now let’s move on to bees.