Ethereum Will Be the Backbone of the New Internet

Ethereum Will Be the
Backbone of the New Internet
Loom Network is building our Layer 2 on top of
Ethereum, instead of other blockchain
platforms — and here’s why.
Each month, another company publishes a whitepaper, claiming
to have solved the scalability problems faced by Ethereum.
These new blockchains claim to be better, faster, and smarter
than Ethereum — they say they can handle thousands,
even millions of transactions per second (TPS), have no
transaction fees, and have near-instant confirmation times.
Yet at Loom Network, when we set out to build a platform for
bringing large-scale decentralized mobile games and social
networks to the mainstream, Ethereum was by far the most
obvious choice to build on top of.

In this article, I’ll explain the reasons why we think
Ethereum has already won the race to become the
foundation of Web 3.0, and will become the fundamental
base layer that all major DApp platforms will choose to build on
top of in the future.
Let’s start with the most obvious.
LINK in Description 
1. Ethereum has an order of
magnitude more developers building
on it than any other platform — and
this gap is widening by the day
Our Ethereum code school CryptoZombies.io has now
had over 207,623+ users since we launched it last
November — and this number has been growing consistently by
over 30,000+ users per month, with no signs of slowing
down.
Truffle (a development framework for Etheruem) has had
almost 550,000 downloads, growing at over 45,000+
users per month since January.
Simply put, the number of developers
building on top of Ethereum is not only
growing — it’saccelerating.

The number of developers using Ethereum’s Truffle Suite each
month is not only growing — it’s accelerating.
That means if another blockchain platform wants to beat
Ethereum in terms of developer adoption, it’s not enough for it
to catch up to where Ethereum is now — it has to exceed
Ethereum’s growth rate moving forward.
Why is developer adoption important?
At the end of the day, it doesn’t matter how many transactions
per second your blockchain can handle if no one is actually
using it.
And in order to have applications worth using, you need to
attract enough developers to build them.
If you don’t have developers building
applications on your blockchain,you’re
effectively buildinga ghost town.
I’m not sure what caused Steve Ballmer to go nuts on stage at
this conference and create this classic moment in meme history,
but I’m including him here to emphasize my point: Developer
adoption is everything.

The blockchain platform that has the most developers building
real-world applications on top of it will be the platform that
gains the widest mainstream adoption. And not only does
Ethereum have a massive head start in this area, but the gap is
widening with each day that passes.
And why is Ethereum attracting the most developers?
2. Ethereum has better tools and
infrastructure for DApp development
than any other platform
Truffle. Infura. Web3.js. OpenZeppelin. Geth. Ganache. MetaM
ask. CryptoZombies. MyCrypto. Etherscan. ERC20 and ERC721.
These are tools (among many others) that different developer
teams have tirelessly poured hundreds of thousands of
hours into — and they’re free to use for any Ethereum developer
who wants to build a DApp on Ethereum.
And this developer ecosystem is only growing as time goes on.
Our team and at least a dozen others are in the process of
building even more tools and infrastructure around Ethereum
DApp development that will make Ethereum developers’ lives
even easier in the future.
It’s Metcalfe’s law applied to developer infrastructure. The more
developers building useful stuff, the easier (and more enjoyable)
it becomes for new developers to build, and the effect
compounds on itself.

If you’re a developer and you wanted to build a blockchain
platform that replaces Ethereum, you would need to build
equivalent versions of all of these tools on top of your
own platform in order to compete with Ethereum’s ease-of-
use for developers.
Or you could, you know… just build on top of Ethereum, and
take advantage of all these things out of the box �
But let’s go one level deeper.
Let’s talk about WHY developers would want to spend their
time building these tools.
And here’s where we go really deep down the rabbit hole, and
see where Ethereum really shines.
Still with me? I haven’t even gotten to the core of my
argument — we’re just getting started.

3. Ethereum does not sacrifice
decentralization
When it comes to Blockchains, there’s a fundamental law
called The Scalability Trilemma. It’s kind of like a law of physics
that says a blockchain can only have 2 of these 3 properties:
decentralization, scalability, and security.
What that means is, given the same level of security, if you
want to increase a blockchain’s scalability,
you must sacrifice its decentralization.
Why is this true?
Due to the nature of blockchains, every single
validator needs to run every single computation that
occurs on the network to ensure its accuracy.
So if you want the network to be sufficiently decentralized by
having thousands of users running validators, the max number
of transactions per second needs to be capped by what the
average user’s PC and network speed can handle.
On the other hand, if you wanted to have the fastest, most
scalable blockchain EVER, you should do the following:
 Require that all validators be supercomputers
 Have as few validators as possible on the network, to
decrease the number of connections per node
 Put all the validators in the same geographical area (country,
data center) to decrease latency between nodes
Can you see why that would be a really bad idea for a
blockchain?
And yet every project I’ve seen that boasts a very high number
of transactions per second is quietly making this
decentralization tradeoff — most of them are just not
transparent about it to their users / investors.

Why decentralization matters
There’s an excellent pair of blog posts from Chris
Dixon and Spencer Bogartwith the same title, “Why
Decentralization Matters” — both highly recommended
reads.
In his article, Chris Dixon makes a simple
argument: Developers are a lot more incentivized to
build on a platform that they know is NOT going to
change the rules on them later down the line, taking
away their audience and profits.
If you build your application on Facebook or Apple’s App Store,
you have to trust that these platforms aren’t going to ban you in
the future, block certain users from using your app or seeing
your updates, or start charging you higher fees to keep accessing
the same audience.
Ethereum, on the other hand, is what we call permissionless.
Ethereum can be used by anyone for any
purpose, without needing permission
from anyone.
NO ONE can stop you from uploading a
piece of code into the Ethereum blockchain,
and NO ONE can stop your users from
executing it.
Let that sink in for a minute, because it’s extremely powerful.

For the first time in history, we have a platform that that no one
can shut down and no one can censor — not governments, not
mega-corporations with tons of money, not the Rothschilds
or Bogdanoffs or Reptilians or whatever conspiracy theory you
subscribe to.
If you build a DApp on Ethereum, no one can stop your users
from anonymously accessing it.
If you buy some tokens or digital items that are stored on the
network, you are GUARANTEED they will stay there forever
and no one will be able to take them away from you.
And it’s these permissionless and censorship-
resistant properties of decentralized blockchains that have
enabled us to have, for the first time in Internet history, true
ownership of digital items.
Yeah, I’m talkin’ about Ready Player One. With true ownership
of digital items that cannot be taken away from
you, blockchains enable us to do crazy new things in online
games and virtual realities — like having virtual avatars that
aren’t owned by any company and can persist between worlds.
More centralized platformsdon’t have this
guarantee

Pretty much every platform that’s been touted as the “Ethereum
Killer” has simply decided to trade off decentralization in favor
of higher scalability, and advertise it as if it’s a feature.
And this tradeoff is tempting to make, because it seems like it’s
what the market wants.
Users who don’t know better complain about high fees and slow
transaction times — so we can’t really blame developers for
trying to give the market what it thinks it wants.
In Spencer Bogart’s Why Decentralization Matters, he says:
It’s not surprising that new users and developers have
gravitated toward these newer networks: Improved
throughput and functionality are things that users and
developers can immediately appreciate, whereas the benefits of
“decentralization” as a feature are seemingly amorphous.
In the short term, users may be tempted by the performance
offered by more scalable blockchains, not realizing the
importance of decentralization until a wake-up call brings
everything crashing down.
He continues:
The reality, however, is that without decentralization
these crypto networks lose their most important
qualities of being “permissionless” and “censorship-
resistant” — that is, that anyone can use the network and
anyone can build on top of them.
After all, the entire point of a decentralized
blockchain is to provide a hard-promise — an immutable
ledger with open, non-discriminatory participation. In a
sense, we bear the inefficiency of decentralization
because it is the only way to enable a network with
these qualities.

Other blockchains that achieve 1,000 TPS or higher do so by
having a small, fixed number of nodes that validate all the
transactions — 21 in the case of EOS, 101 in the case of Lisk.
But a network run by 21 nodes requires that you trust
these 21 publicly-identifiable nodes to not make
changes to the protocol, or restrict certain people from
using it for certain purposes in the future.
It’s a lot harder for a malicious entity to influence thousands of
anonymous Ethereum nodes to censor certain transactions than
it would be for them to gain influence over 15 out of 21 publicly-
known block producers. Or for these 15 block producers to form
a cartel and change the rules in ways that profit them, like what
happens on centralized platforms. Or for a government or
corporation to put pressure on these entities to censor certain
transactions or users.
As Spencer puts it:
These semi-decentralized platforms are subject to the same
social and economic pressures that motivate centralized
platforms to censor certain users and activities, and therefore
will trend toward the same outcome they’re supposed to
correct.
If developers can’t trust 100% that the base layer will always
remain permissionless and censorship-resistant, then there’s
very little incentive for them to start building on the platform vs.
simply using a traditional web server.
By sacrificingbase-layerdecentralization in
the nearsighted goal of attracting users by
increasingthroughput, these platforms have
ironicallyundermined the entire motivation
for using a blockchainin the first place.

And on top of that, increasing throughput on Layer 1 isn’t even a
scalable approach.
It will get you some initial gains, but it’s fundamentally
bottlenecked by the nature of blockchains and not the way to
achieve true scalability.
Which brings me to my next point…
4. It will be impossible to run all the
world’s decentralized applications on
a single blockchain: Scaling has to
occur on Layer 2
It would be absurd to try to run the Internet’s 100 most popular
games and social apps all on one giant supercomputer.
Likewise, it’s absurd to assume all the world’s decentralized
applications in the foreseeable future will run on one
blockchain.

Facebook alone needs hundreds of thousands of servers to
function. Yet some people think a decentralized Facebook would
share one massive blockchain with every other DApp in
existence? �
Let’s look at some quick numbers.
Facebook experiences 30,000+ Likes / Comments per second,
the Nasdaq sees 20,000+ trades per second, and MMO games
like PlayerUnknown’s Battlegrounds handle over 1M concurrent
users updating game state.
It would only take a few dozen apps and games of this size
before you’re exceeding one million TPS in aggregate.
And then what do you do when the number of users doubles?
Clearly trying to run every single DApp on the same chain is not
a practical approach.
It doesn’t matter if a blockchaincan do a
thousand transactions per second or a

million transactionsper second — nosingle
blockchainwill be fast enough to handle all
the world’s decentralized applications on the
same chain.
Scaling has to occur on Layer 2
The solution is obvious — these applications will need to be split
up across multiple blockchains.
We realized this early on at Loom, when we presented the idea
of application-specific sidechains. We foresaw that eventually
some decentralized applications would grow popular enough to
reach even 1/10th of Facebook’s scale, and the only possible way
to run them would be on their own dedicated chains.
Of course, if you put these DApps that require thousands of
transactions per second on their own standalone blockchains,
they would be vulnerable to the same issues we discussed above
in “Why Decentralization Matters.”
But if you put them on a sidechain to a blockchain
that is sufficiently decentralized (like Ethereum) — you get the
best of both worlds.
Sidechains provide higher scalabilitywithout
sacrificing security
A sidechain can use a different consensus algorithm (like DPoS)
optimized for DApps that require very high TPS or low-latency,
while storing any tokens or data requiring a high level of
security on the main chain.
This way, even though the sidechain is less decentralized than
the main chain, the amount of trust required by users is

minimized, since they have the option to move anything of real
value to the main chain for safe keeping. (Even more so if you
secure the Layer 2 assets with Plasma Cash).
By putting your DApp on a sidechain to a decentralized
mainnet, you get all the benefits of higher scalability offered by
a faster blockchain, while maintaining the same trust and
security guarantees provided by the decentralized base layer.
Spencer, in his article, arrives at the same conclusion we came
to:
The path forward: Highly decentralized base layer
with increased centralization (and efficiency) on
higher layers
And in fact, this seems to be the same model envisioned by
Vitalik Buterin himself:
You could run StarCraft on the blockchain.
Those kinds of things are possible. High level
of security and scalabilityallows all these
various other things to be built on
top. Ethereum is a secure base layer that
doesn’t have too many features.
~Vitalik Buterin
Ethereum provides a secure base layer for Layer
2 solutionsto build on top of
Now we understand that:
1. Scaling needs to happen on Layer 2
2. The most important property of a Layer 1 is decentralization

So the real question is, if not Ethereum, what base layer would
you build your Layer 2 on top of?
We’ve already seen that very few chains do decentralization as
well as Ethereum does.
According to a recent ConsenSys report, there are “just under
17,000 nodes running the Ethereum blockchain across six
continents, making it the most decentralized blockchain
platform in existence.”
And any additional features another blockchain might offer,
such as higher throughput, gas-less transactions, low-latency
transactions, etc., can simply be implemented as Layer 2
services on Ethereum.
In fact, those features are exactly what we’re building at Loom
Network with ZombieChain — a Layer 2, gas-free, low-latency
DPoS sidechain to Ethereum.
And that’s just one of many Layer 2 scaling solutions under
development.
It’s hard to fathom why a developer would want
to replace Ethereum instead of simplybuilding
on top of it �
Ignoring the obvious motivation that doing so allows them
raise hundreds of millions of dollars in an ICO… �

“It’s like Ethereum… but BETTER.”
It’s kind of like reinventing the wheel.
Sure, you might be able to build a slightly better base layer that
still provides sufficient decentralization AND throws in some
additional features.
But then you’d somehow need to convince all the developers to
jump ship to use an untested platform — and in the meantime,
Ethereum developers could take whatever good ideas you had,
and implement them on a Layer 2 chain on top of Ethereum.
It’s also extremely risky.

If a Layer 2 platform gets hacked or exploited, users’ loss is
minimized because the majority of tokens and data of value is
still safely stored on the Layer 1 (Ethereum).
But if you build a new Layer 1 blockchain that stores tokens that
users pay real money for, the odds that your code will be
exploit-free out the gate are slim — and in the case of an exploit,
your users potentially have billions of dollars at stake.
In programming circles, there’s a rule that states “Don’t roll
your own crypto.”
I’m going to go ahead and predict that after we see the first
major blockchain exploit in which millions or billions of dollars
in token value evaporate into thin air, we’ll start to hear a
similar refrain among blockchain engineers:
Don’t roll your own Layer 1.
Which brings me to my final point…
5. New platforms are unproven, while
Ethereum‘s security has already
stood the test of time
At the time of this writing, there’s $61 billion in circulating
ETH.
That’s a LOT of financial incentive for someone to try to hack /
exploit the network.

Thousands of aspiring h4x0rs over the past 3 years, trying and
failing to find an exploit in Ethereum
And yet to this day, almost 3 years after Ethereum’s mainnet
launch, no one has managed to find an exploit in the platform’s
security.
Note: Exploits have been found in individual smart
contracts that developers have deployed to Ethereum, but I’m
talking about the core platform itself.
The more time that passes without an exploit being found
(despite a lot of people trying), the higher the likelihood that the
platform is secure and won’t ever be exploited in the future.
This is similar to what Nassim Taleb called The Lindy Effect:
The Lindy effect is a concept that the future life expectancy of
some non-perishable things like a technology or an idea is
proportional to their current age, so that every additional
period of survival implies a longer remaining life expectancy.
Basically, when a new blockchain platform springs up,
developers will be reluctant to use it because it hasn’t stood the
test of time.

What if it’s exploitable? What if it’s not truly decentralized?
Why should I invest all my time building my DApp on top of it
when I’m not sure if it’ll be around two years from now?
The longer the chain survives without suffering a major exploit,
the more trustworthy and legitimate it becomes in developers’
eyes.
Yet again, Ethereum has a massive head
start here.
For a new blockchain platform that launches today, it will take a
few years before it has survived long enough for developers to
view it as trustworthy.
But in that same time, Ethereum will continue to race ahead in
terms of developer adoption and supporting infrastructure. (Not
to mention real, live DApps and end-users).
Because Ethereum has such a long head start on all other smart
contract platforms, it will always appear to be a better option
from a security standpoint compared to a younger blockchain.
Especially when, as we mentioned before, any new feature a new
smart contract platform adds that might tempt developers away
can simply be built on Layer 2 — and still keep the security
promises of Ethereum.
Conclusion: Ethereum isn’t perfect —
but at this point, it’s hard to imagine
it being displaced as the de facto
Layer 1 for decentralized applications

JavaScript isn’t a perfect programming language, and for the
longest time it was plagued with some pretty serious problems.
But that didn’t stop it from becoming the de facto programming
language of Web 2.0.
I predict we’ve already reached the tipping point where
we’ll see the same thing happen with Ethereum for
Web 3.0.
For all its flaws and short-comings, it also has some of the
smartest minds in the industry working on solving them — and
building tools and infrastructure to make them less of a
hindrance.
And thus we come full circle to my developers argument. (Go
ahead, you can watch that Steve Ballmer clip again. I won’t tell
anyone. �)
It’s possible that, in the future, another project will spring up
that offers some significant advantages over Ethereum, and
manage to get all the Ethereum developers to jump ship…
But I wouldn’t bet my ERC20s on it.

Ethereum Will Be the Backbone of the New Internet

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