What are blockchains and what are they used for?

January 12, 2025

Blockchain's impact

On the internet cryptography was traditionally responsible for secure communication via [[key exchange]] and encryption.

However the most recent applications have been in the blockchain space where it is being used for 2 use cases:

  1. Data Integrity - [[signatures]], [[commitments]], [[ZK proofs]]
  2. Protecting secret keys via threshold signatures.

Similarly there are many other sciences that have also been advanced with the coming of blockchains Conference:

  1. New Consenus Protocol (distributed systems)
  2. New Cryptography (ZK-SNARKs)
  3. New Enconomic Models (tokenomics, lending protocols, exchanges)
  4. New Democractic Governance Mechanisms (DAOs)
  5. New progrogramming languages and verification tools

What is blockchain used for?

A blockchain provides a method to coordinate among many parties where there is no single trusted party. An important contrapostive - If there is a trusted party then blockchain is generally not required.

Current application areas

  1. Finance (DeFi) - new financial instruments, exchanges, lending...
  2. Managing digital assets (NFTs) - Assured provenance
  3. DAOs

What are the new innovations that blockchain brought to the world?

  1. 2009 - Bitcoin gave us the Ledger - a public append only data structure.
  2. 2015 - Ethereum gave us the blockchain computer that allowed people to write composable programs on the blockchain.
  3. 2017 -> Current Day - a number of application areas have come up.

What is a blockchain

A blockchain is composed of 4 different layers:

  1. Consensus Layer (data availability)
  2. Execution Layer (blockchain computer)
  3. Application Layer (DAPPs, smart contracts)
  4. User facing tools (wallets, cloud servers)

Hot research topics

  1. Scaling problem - Ethereum processes 15tps. How to increase?
  2. Privacy on the blockchain - businesses cant use if all transactions are problem
  3. Interoperability between blockchains
  4. Managing Maximal Extractable Value (MEV)
  5. Zero knowledge proofs of solvency. (the FTX case)