Vitalik Buterin: Proof-of-Stake Blockchains of the Future Will Be 'Thousands of Times' More Efficient

Ethereum co-founder Vitalik Buterin recently went over some of the non-financial applications of blockchain technology in a Twitter thread. He also noted that “as blockchain scalability gets better and better, and user interfaces (UX) improve and fees drop as a result, this will become a bigger and bigger part of the story.”

Buterin, who recently received an honorary doctorate from Switzerland’s University of Basel, believes: 

One underappreciated way to view blockchains is as an extension of cryptography that does different things. Cryptography allows you to encrypt data [and] prove data was signed by someone.

He added that “blockchains, on the other hand, allow you to prove that a piece of data was not published."

Verifiying Academic Credentials On A Blockchain

Buterin explained that a blockchain-based system could help verify a university degree as “a degree is certified with just a digital signature, but revocations are put on chain.” He continued by noting that: 

With cryptography alone you can't check that a revocation was not signed; but with a blockchain ... to check that a degree was not yet revoked, you simply scan the chain and check all of the logs of the revocation contract. If a given degree was signed, and the revocation is not found on chain, then that means it's still valid.

Buterin further noted that another non-financial application of blockchain is: 

Key revocation in self-sovereign identity. [For instance] if you have a key A, then you switch to key B, then key A is hacked later, how does someone you're interacting with [know] key A is no longer valid? [They] can check for revocations on chain.

Going on to point out another potential use case for blockchain, the Russian-Canadian programmer mentioned that the “integrity of processes” could be validated using the distributed ledger. He gave the example of an auction where “you might want to verify that everyone's bid that was submitted on time was included, and no late bids were included. If bids are published to chain, even encrypted, you can do this.”

Non-Financial Applications Of DLT Have An Advantage

According to Buterin, “non-financial applications” of distributed ledger technology (DLT) have a clear advantage over financial ones because “there’s less at stake if they break, so fewer reasons to fear deploying them fairly quickly.” Because business owners and organizations could potentially deploy non-financial blockchain-based platforms faster, their adoption and development might occur at a faster rate than blockchain-enabled systems used to transfer monetary value.

Additionally, Buterin pointed out that a “blockchain Merkle receipt” lasts forever, while “centralized servers can decide to change the rules later, they can get hacked, or they can just shut down if the company disappears.” Elaborating on how cryptography allows users to really own their data, Buterin wrote: 

An ERC-721 [compliant token is a] collectible that you hold in your ethereum wallet [and it’s] "yours" in a very real cryptographic sense. [This] would not be the case if it was just stored in a centralized server.

Future Blockchains With Sharding, PoS Will Be "1000x More Efficient" 

Moreover, Buterin thinks that the “blockchains of the future” with proof-of-stake (PoS) and sharding will be a “thousands times more efficient” than centralized servers. However, he clarified that “blockchains are NOT about” reducing “computational costs”, but rather about “incurring a sacrifice in the form of INCREASED computational costs to achieve a decrease in social costs.”

He added that: 

Computers have become 1 trillion times cheaper, per unit computation, in the last 70 years. Human labor has gotten 2-10x more expensive. So incurring high technical costs to achieve reductions in social costs is at least sometimes a very good bargain.

Buterin also predicted: 

If layer 1, [or the base layer of blockchains, aka main chain] becomes cheap enough, I literally foresee things like receipts of everyday purchases being published to blockchains. Because it'll just be the simplest tool out there for achieving the desired guarantees of verifiability, non-double-spending, etc.