At the Wanxiang Global Blockchain Summit 2018 in Shanghai on Sep 11th, Vitalik Buterin, co-founder of Ethereum, presented his view of the relationship between mechanism credibility and blockchain. Unlike his usual keynotes which mainly focused on the underlying technology behind public blockchains, he focuses on practicality of the even more complex socio-economic functions of blockchain and the corresponding challenges.
Vitalik states the best mechanism “tries to allocate best resources for those with the most need, whether it is projects, governments, or companies.” Some examples of mechanisms are voting, auctions, markets, and exchanges (including decentralized exchanges). How fairly and efficiently resources are allocated rely on the credibility of the mechanism design. While centralized mechanism has remained the norm, this requires all parties to trust the central mechanism to operate correctly. Yet, as Vitalik says, there are currently serious trust issues between people and centralized systems.
Though a pioneer in blockchain, Vitalik dedicates the latter half of his presentation to discussing four significant challenges that proves a decentralized blockchain is not the solution neither. The four challenges are: miner/validator manipulation, privacy, anti-sybil, and collusion. As Vitalik said: “Blockchain can solve some problems but blockchain cannot solve all problems.”
While Vitalik proposed Multi-party Computation as the technical solution to mechanism credibility, Hong Kong start-up, Distributed Business Accelerator (DBA), sees the real answer in creating socio-economic model with a hybrid of centralization and decentralization.