Why Even Big Tech’s Blockchain Narrative Doesn’t Make Sense | by Dirk Songuer | November 2022
This is sort of, kind of a follow-up to “Why I don’t believe the Web3 narrative” and “Why I Don’t Believe the Blockchain Technology Narrative.”
I wrote this thing about how blockchains are not a scale technology and their narrative is mainly driven by criminals and investors.
Now Meta came out with a bunch of feature announcements and people started going wild how this validates Web3 and blockchains:
We will. No. While Meta believes in this blockchain future for creators, there is just one minor problem.
As, really SLOW. The problem is the way blockchains achieve a distributed system without central authority: Consensus mechanisms.
These are the mechanisms by which all participating nodes in the blockchain network look at each other and go: “I want to add these transactions to the database. Do you all agree? Yes? Do we all agree? Great – it’s added now“. They stop periodically to have these discussions, and then continue.
It’s a bit more complicated, but technically all nodes in the blockchain must be synchronized to have the same state and verify the state together. This implies that blockchains operate synchronously and block, meaning their speed is limited by the “ticks” of that consensus mechanism.
This “waiting” makes them horribly slow compared to regular databases, to the point where it is mathematically provable that they cannot scale.
What scale are we talking about? Well, Meta has this to say:
As we celebrate Creator Week at Meta, I share why we believe the growing use of web3 technology, such as blockchain, is beneficial to the 300 million people around the world who now identify as creators, and anyone who wants to join them budding creator economy.
Great, so they want to enable three hundred million people via Blockchain. More specifically the Polygon blockchain.
According to their own blog post, Polygon has a theoretical limit of 7,200 transactions per second (TPS).
What if all 300 million content creators want to create just one single item, roughly at the same time?
300,000,000 / 7,200 = 41,667 seconds = 694 minutes = 11 1/2 hours
So they all push the button to create their content thing and the last one will see their content go up 11 hours later.
But wait, that’s just the theoretical maximum – why aren’t we looking at the actual performance? Even Polygon itself admits that the more realistic number is around 1,000 TPS (or 3 1/2 days to settle all transactions). Meanwhile, Polygon Scan reveals that the actual TPS for Polygon right now is around 40 (or 12 weeks to settle all transactions).
Let me repeat that:
Meta built a feature that, when the entire target audience uses it, takes between 11 hours (best case) and 12 weeks (worst case) to respond to a single input.
Adding more blockchains and spreading the load across multiple blockchain networks will not work. Polygon is actually one of the faster ones. The mighty Ethereum taps out at around 24 TPS, and if you include all sidechains, that’s a couple dozen TPS. Yes really.
Well, the whole thing is first and foremost good marketing: release a few flashy articles and news, give the function to some influencers, run the thing as long as they can and then quietly bury it. It’s not a bad strategy to cash in on the current Web3 / NFT / Metaverse hype.
But let’s say the feature gains wide adoption. The only way to make this feature scale to all potential users is… not to use a blockchain. To remove the consensus mechanism and replace it with something simpler: A network of trust. Where Meta will appear as a “trusted entity”, running “its own blockchain” with “its own special wallets” that are “fully open through these APIs”.
In other words: A traditional database with Meta as the main controlling unit.
Make no mistake, when Meta states that their goal is to “helping creators reach an audience, grow their communities and make a living“, what they mean is: “own the audience data, segment it for targeting, sell ads and also make money by taking a cut from all other platform creators.“Because that model works. They want an App Store for people.
That is why the Meta announcements do not change anything fundamental for Web3 or blockchains. Blockchains may be useful for extremely specific, highly niche things, but they are not a scale technology, let alone a revolutionary paradigm shift.
