Great article on Medium by Haseeb Qureshi to help make sense of the evolving cryptocurrency world. I particularly liked the predictions that follow from his model.
Analogies are frequently used to explain the crypto space, e.g. bitcoin as digital gold. They inevitably fall short. They are just a bridge or a catalyst to help develop a deeper understanding of something that is typically novel and complex, sometimes just a very small part of it. They are not the destination. The risk is to allow my thinking to be bounded by the analogy and overestimating my understanding.
In this article the author helped me to make more sense of the crypto landscape at a higher level. My mental model is significantly upgraded.
My notes:
- Think of L1 blockchains as cities, not networks.
- Ethereum is NYC. It’s expensive, crowded, happening. How do you scale a city?
- L2’s and rollups. This is building up. These are skyscrapers that make space. Polygon is an example. But in order to visit another skyscraper you have to exit to the L1 (Ethereum) level.
- “interoperability networks.” These allow developers to create application specific blockchains which are connected. Examples are Polkadot and Cosmos. These are like a “network of small towns” where each town only does one thing. The towns are connected by a larger highway system.
- Build another city (L1). Solana=LA. Avalanche=Chicago. NEAR=SF. The advantages are that they can be built differently, but infrastructure is needed and duplicated.
- 6 (very useful) predictions from this model:
- Multichain future (multiple cities).
- Ethereum will probably be the most valuable.
- Other L1s will be valuable also, but will need to be different somehow.
- L2’s matter. Great quote: “L2s are an ‘and’, not an ‘or’.
- “Application-specific blockchains will remain niche.”
- Significant value in future in cross-chain bridges. Think of as cost of transportation.
CryptoNotes 