Blockchain: Technology, Economics, and Its Future
Hello everyone! It's been a long time since I last wrote about Blockchain. Looking back from 2023, I don't think it's too early or too late to revisit this topic. So many people have already written about Blockchain, and countless concepts have been discussed from different perspectives. Nevertheless, I'd like to share some fundamental information about Blockchain, along with my personal perspective after several years of experience in the industry.
I first encountered Blockchain through the concept of Cryptocurrency when I was still in high school, thanks to the Vietnamese rapper Nah :):). Back then, I thought coins were simply virtual currencies, much like the credits used on Fshare or other payment systems for things like game top-ups. I didn't pay much attention to them.
After some time had passed, I entered Ho Chi Minh City University of Technology (HCMUT). Through a series of unexpected circumstances, I officially began my journey into Blockchain toward the end of my second year at university, and I've continued down this path ever since.
What Is Blockchain?
If you type "What is Blockchain?" into Google, I'm sure you'll find millions of results answering the question in different ways and from different perspectives. From my personal technical perspective, Blockchain simply means a "chain of blocks."
Blockchain is a concept in which data is organized into a continuous, ordered chain of interconnected blocks, using cryptography and distributed storage technology.
Today, Blockchain is no longer limited to Bitcoin or the Ethereum blockchain. In my view, any implementation that meets at least these six characteristics can be considered a Blockchain:
- Decentralization: The distribution of control and data across multiple participants.
- Consensus: A mechanism that allows participants to agree on the state of the system.
- Immutability: The ability to make recorded data extremely difficult to alter retroactively.
- Transparency: The ability to verify and inspect relevant transactions and records.
- Security: Protection against attacks, unauthorized changes, and other threats.
- Anonymity: The ability to participate without necessarily revealing one's real-world identity.
The Nature of Blockchain
In my opinion, Blockchain has two parallel foundations that have contributed to its worldwide success and adoption. The first is its technological foundation—decentralization, transparency, and immutability (Blockchain). The second is the power of its economic and social dimensions (Cryptocurrency).
Technology provided the solid foundation upon which Satoshi Nakamoto built the first decentralized digital currency, Bitcoin. However, the value of BTC, together with the broader social and community dynamics surrounding it, has played a significant role in bringing Blockchain to its current position.
Blockchain + Cryptocurrency
The Technological Perspective
To be honest, since Satoshi published the Bitcoin white paper in 2008, there have been relatively few fundamental changes to the underlying technological ideas.
Ethereum and other emerging Blockchain platforms have introduced many improvements and new capabilities, but a considerable part of their development builds upon concepts that Satoshi helped establish. In many ways, these advances represent a progression from the original foundation to increasingly sophisticated implementations.
Even so, Blockchain technology still has a long way to go before realizing the ambition of transitioning from Web2 to Web3 and completely replacing the former. :)
So, what is really keeping Blockchain relevant and attracting so much attention today?
The Economic and Social Perspective
"Money is a matter of the heart." — or, more literally, in Vietnamese, "Money is closely tied to one's livelihood."
What has sustained Blockchain's position is not necessarily technological superiority, but the power of money itself.
This applies to the technology industry and almost every other field in today's money-driven world. Capital flows toward opportunities where it expects the greatest returns, and Blockchain has become one of the markets attracting substantial investment.
This is also part of how I interpret the broader scientific landscape since the beginning of the twenty-first century. Compared with the previous century, we may seem to have witnessed fewer groundbreaking scientific breakthroughs. Researching an advanced computer, developing a new medicine or material, or making a major discovery in space can cost billions of dollars, while the financial returns may not always justify the investment.
Returning to cryptocurrency, money has existed throughout human civilization. In prehistoric times, people used objects such as stones and leaves as primitive means of exchange. Over time, gold and silver became valuable stores of wealth, followed by coins and paper money.
As information technology advanced, money increasingly became numbers stored electronically and managed by centralized institutions.
With the emergence of Industry 4.0, Blockchain introduced a new way to represent and transfer digital assets. Cryptocurrencies can be secured, verified, and transferred across borders through decentralized systems, maintained by computers and automated software rather than relying entirely on a central authority.
Generally speaking, regardless of its form, I believe a currency's value depends on four key characteristics:
- Scarcity: Gold, fiat currencies, and Bitcoin have different mechanisms that limit their supply or issuance. Their scarcity depends on the properties of the asset and the rules governing it.
- Durability: A currency or store of value should retain its usefulness over time without being easily damaged or destroyed.
- Acceptance: It must be accepted by a community, a country, or multiple countries as a means of payment or exchange.
- Stability: Its purchasing power or exchange rate should not fluctuate excessively over short periods.
The evolution of money throughout human civilization
The Current State of Blockchain
Based on my observations and the analysis above, I believe Blockchain is currently in a period of chaos. :)
Millions of projects seem to emerge every day, while countless others disappear. Billions of dollars flow into the market, and billions more evaporate. Millions of people become wealthy, while many others experience devastating financial losses.
It is a turbulent era, full of risks but also rich with challenges and opportunities for newcomers willing to explore this landscape.
Heroes emerging during the chaos of the Three Kingdoms era
From a technological perspective, Blockchain is still relatively early in its long development journey. Existing technologies have yet to meet many of the expectations placed upon them.
Artificial intelligence, for example, has been researched for decades, with roots extending well before the 1990s, and its applications have gradually become more widespread in everyday life. Blockchain, by contrast, still revolves primarily around cryptocurrency as its most prominent and proven application. Many proposed applications in other areas of society have yet to demonstrate that Blockchain can deliver clear advantages at scale.
The Future of Blockchain
Will Blockchain Ever Die?
I believe in Blockchain, but not simply because of its technology. Rather, I believe it has reached something resembling a Nash equilibrium within game theory.
In my view, there are two broad scenarios that could bring Blockchain to an end:
- First, technology: If the underlying technology were fundamentally compromised, the foundation supporting Blockchain would collapse. Cryptocurrency could then lose two of the characteristics I mentioned earlier: scarcity and durability. More precisely, this would happen if the system could no longer reliably enforce its supply rules or preserve the integrity of its records.
- Second, economics and society: If humanity as a whole—every single one of the world's eight billion people—turned its back on Blockchain and cryptocurrency, the remaining two characteristics, acceptance and stability, would disappear.
Returning to the first scenario, Blockchain has existed for around fifteen years as of the time of writing. Its underlying technology has not only survived but has continued to evolve, making a complete technological collapse seem highly unlikely to me.
As for the second scenario, Blockchain is closely tied to money and financial incentives. It seems implausible that every person on Earth would permanently abandon an entire category of financial assets and opportunities.
Consider how governments around the world are trying to regulate cryptocurrencies or even ban them. Despite these efforts, there will likely always be countries or communities where Blockchain and cryptocurrency remain accepted and used. Expecting every human being on Earth to voluntarily abandon a potential source of financial gain is difficult to imagine in practice.
Of course, regulations, market sentiment, and technological developments can significantly affect Bitcoin's price at particular moments. But as long as people continue to participate in these networks and new generations of users emerge, I believe Bitcoin and Blockchain will retain some degree of relevance.
This is the idea I associate with a Nash equilibrium: a situation in which participants have little incentive to change their strategies unilaterally, given what everyone else is doing.
If you're interested in this concept, I encourage you to explore game theory, which provides useful ways to understand both the consensus mechanisms underlying Blockchain and the social and economic incentives surrounding it.
Nash equilibrium in game theory
What Will the Future of Blockchain Look Like?
I don't know exactly how far Blockchain will develop or what it will ultimately achieve. However, based on my current understanding and perspective, I believe the road ahead will present many interesting opportunities and challenges worth looking forward to.
Cryptocurrency
Governments around the world are increasingly introducing regulations to gain some degree of control over this lucrative and largely decentralized market. As a result, parts of the cryptocurrency ecosystem may gradually become more centralized.
Central banks are also exploring or developing their own Central Bank Digital Currencies (CBDCs). Financial and economic power has always been one of the three major pillars of statecraft, alongside diplomacy and national defense.
Central Bank Digital Currency (CBDC)
I think that, over the coming decades, Bitcoin may increasingly resemble gold or the US dollar in the way major institutions and powerful entities hold, manage, and use it as part of their financial reserves.
At the same time, a smaller portion of the ecosystem may continue circulating through decentralized networks and communities. In my view, this could contribute to greater market stability and a better balance between institutional participation and individual users.
Perhaps the influence of large private holders—often called whales—will become less capable of easily manipulating cryptocurrency prices. In such a scenario, the four characteristics of money I discussed earlier could become more clearly established.
Of course, this is only my personal projection. Bitcoin's future will depend on many factors, including regulation, adoption, market structure, and technological change.
Blockchain
From a technological perspective, I believe Blockchain will also move toward a form of balance: becoming more coordinated and manageable without entirely abandoning decentralization.
Such an approach could make Blockchain easier to govern, improve, and adapt to different societal needs beyond finance.
I don't think the next stage of the Internet will involve Web3 completely replacing Web2. Instead, I expect something closer to Web2.5—a combination of the two that improves existing systems rather than attempting to replace them outright.
This hybrid approach could make the technology more accessible, easier to adopt, and more scalable for millions or even billions of Internet users across different industries.
In a way, this resembles how AI has been integrated into existing products and workflows: rather than replacing every established system, it often enhances what is already there.
Blockchain applications across different areas of society
In Closing
That's all from me, Anhkolamgidauanhthe. The articles on my page are intended to share knowledge, experience, personal perspectives, and occasional reflections.
If you have a different perspective—or an interesting idea you'd like to contribute—feel free to leave a comment. I'd love to exchange ideas and discuss them with you!