What is a public chain?
1. Concept
A public chain is a type of blockchain network that is based on blockchain technology. Its blockchain data is publicly accessible, allowing anyone to join the network, participate in transactions and consensus processes, and view, participate in, and verify the data. It is important to note that a public chain is completely decentralized and does not rely on a central authority. Instead, it is maintained and managed by multiple nodes. Therefore, public chain data is transparent and tamper-proof.
2. Features
Decentralization
Public chains operate in a decentralized manner, without a central controlling node. All nodes participate equally, which helps prevent failures and improves system stability and security.
Openness and Transparency
Anyone can view and verify transaction data on a public chain. Anyone can join the public chain network, participate in transactions and mining without specific permission or authentication. The information of transactions on the public chain is open and transparent, and the entire blockchain history enhances network transparency. This feature helps prevent tampering or falsification of information and transaction data, increasing the trustworthiness of transactions.
Immutability
All public chains must use cryptographic principles to protect the security and privacy of transactions. Transactions on the public chain are immutable. Every transaction and action on the public chain is recorded and cannot be deleted or modified afterwards. This immutability ensures the reliability and authenticity of public chain transactions.
Consensus Mechanism
The consensus mechanism of a public chain ensures that all participants in the network have a consistent recognition of the data. For example, Bitcoin uses Proof of Work (PoW), and Ethereum uses Proof of Stake (PoS). The consensus mechanism helps prevent double spending of the same cryptocurrency.
Smart Contracts
Public chains support smart contracts, which enable automated transactions and contract execution. This functionality improves transaction efficiency and reliability while reducing transaction costs.
3. Development Stages
3 Development Stages
2008-2015: Enlightenment Stage
The enlightenment stage began in 2008 with the emergence of Bitcoin, which can be understood as a "public ledger." This was the earliest definition of "blockchain," and the concept of a public blockchain did not exist at that time. Blockchain was defined as a public ledger.
After 2015: Infrastructure Construction Stage
The appearance of the Ethereum public chain in 2015 marked the beginning of the era of underlying public chains. Smart contracts were proposed during this stage. The development of public chains during this stage is similar to operating systems on smartphones. Developers can write apps, or smart contracts, on this public chain according to their own ideas. The role of the public chain is to provide a platform for applications, reducing the threshold for application development. The public chain is like a platform product that supports anyone to build and use decentralized applications through blockchain technology. It also allows users to create complex operations according to their own wishes, providing a template for developing decentralized applications at the underlying level. Therefore, this stage is characterized by the transformation brought by the emergence of Ethereum and the Ethereum ecosystem. Compared to Bitcoin, the Ethereum public chain not only supports the transaction of its own cryptocurrency, but also aims to become a decentralized application and smart contract platform. Compared to the transaction-oriented features of the Bitcoin public chain, the Ethereum public chain focuses more on building and running various applications on its blockchain. The scripting language provided by the Bitcoin public chain is very limited, supporting only basic transactions and very limited smart contract functionality. In contrast, with the emergence of Ethereum in this stage, comprehensive smart contract functionality is provided, allowing developers to develop and create complex applications on the chain, such as decentralized finance (DeFi) and non-fungible tokens (NFT). In terms of block transaction speed, there is also a significant difference between the two. Each block of the Bitcoin public chain is generated approximately every ten minutes, resulting in very slow transaction speed. The Ethereum public chain generates blocks in approximately 13 to 15 seconds, resulting in faster processing speed. In summary, the emergence of public chains in these two stages has significant differences in terms of functionality design, consensus mechanisms, transaction speed, and fees. Bitcoin focuses more on its role as a digital currency, while Ethereum provides a more complex and multifunctional platform, supporting various decentralized applications and smart contracts, taking the intelligence of blockchain to new heights.
Current Stage: Ecological Competition Stage
Taking the development stages of mobile operating systems as an example, in the past, there were various systems such as iOS, Android, and Symbian. After market competition, only iOS and Android remained. Therefore, the current stage of public chains is the stage of ecological competition, with the competition of ecosystems on public chains as the main focus. This competition can attract developers and users to join the public chain ecosystem, and the tokens of the public chain will also increase in value due to the prosperity of the ecosystem. Currently, Ethereum is the leader in the blockchain industry, but it faces scalability issues such as slow transaction speed and high transaction fees.
In this stage of ecological competition, various high-quality projects appear on public chains. Due to the limitations of Ethereum's development, NFT and GameFi have brought new demands for scalability to public chains. Therefore, in this stage of ecological competition, a high-quality public chain is needed to propose new solutions to the performance issues of Ethereum, such as improving transaction speed and reducing transaction costs. Just as Ethereum was introduced to solve the shortcomings of Bitcoin, opening up computing and execution functions, Ethereum has become a leader in blockchain development. Similarly, a high-quality public chain is currently needed to propose new performance improvements, such as implementing communication and social applications.
Components of a Public Chain
01 Consensus Mechanism
A blockchain can be understood as a ledger, and the consensus mechanism determines who gets to keep the accounts on the blockchain. Most public chains use variations of the following three consensus algorithms:
Proof of Work (PoW): The higher the computing power, the greater the probability of obtaining the right to keep the accounts.
Proof of Stake (PoS): The more tokens staked, the greater the probability of obtaining the right to keep the accounts.
Practical Byzantine Fault Tolerance (PBFT): Random selection that ensures security (safety) and liveness as long as the number of malicious nodes is less than or equal to one-third of the total.
02 Virtual Machine
EVM, short for "Ethereum Virtual Machine," is one of the core components of the Ethereum blockchain platform. It is a global, decentralized computer that primarily executes smart contracts and applications (Dapps) on Ethereum. It processes and executes the code in smart contracts to ensure that contracts are executed as intended.
03 Smart Contracts
The type of smart contract is one of the important factors that determine the development cost for developers.
Why are there so many public chains?
As mentioned earlier, just like mobile operating systems, there are currently only iOS and Android in the market. However, before these two systems became dominant, there were other systems such as Nokia's Symbian, Microsoft's Windows for mobile, and BlackBerry's OS. Therefore, the current stage of public chains is a stage of competition, and different public chains provide different performance and application scenarios. The urgent need for public chain transformation can be attributed to the following three reasons:
Performance Requirements
Public chains provide the infrastructure and computing services for blockchains. As decentralized ledgers, the performance of processing transactions is an important metric for evaluating public chains. The current blockchain leader, Ethereum, has scalability issues such as slow transaction speed and high transaction fees. Other public chains that have emerged aim to solve performance issues and improve transaction speed through different solutions.
Scalability Requirements
The prosperity of DeFi has led to high gas fees and congestion on the Ethereum network, which has continued into 2021. The booming NFT and GameFi industries have also put forward new requirements for the scalability of public chains.
Market Demand
During bull markets, there is a huge demand for various applications, and public chains with strong technology and abundant funding can seize opportunities and attract various applications to join their ecosystems.
How to Evaluate a Public Chain?
01 Performance
Performance Indicators: Transaction Per Second (TPS) and Transaction Finality (TF) are two dimensions to measure the effectiveness of transaction processing on public chains.
Factors influencing performance include:
(1) Consensus Mechanism: Ensuring the honesty of nodes and preventing malicious behavior.
- POW: The consensus mechanism of Bitcoin, which proves by consuming computational power and energy. It has a high degree of decentralization but poor scalability (processing about 7 transactions per second with a transaction finality time of 60 minutes).
- POS: The consensus mechanism of Ethereum, which proves by staking Ether. It also has scalability issues.
- POSA: The consensus mechanism of Binance Smart Chain, which combines delegated proof of stake and proof of authority.
(2) Smart Contracts: The programming language used for smart contracts, such as Solidity or Move.
(3) Node Division of Labor and Quantity.
02 Developer Ecosystem
(1) Virtual Machine: The EVM was initially developed for running on Ethereum and executing smart contract code, ensuring the expected execution of contracts. If a new public chain is not compatible with the EVM, it needs to be redeveloped and deployed on the public chain, which incurs costs for developers to learn a new language.
(2) Support for the Ecosystem: The availability of resources and support for projects behind the public chain.
(3) Ecosystem Layout: Different public chains focus on different areas, such as DeFi, lending, financial derivatives, games, and NFTs.
It is important to note that there are some essential components for launching a public chain, including wallets, blockchain explorers, token standards, decentralized exchanges (DEX), lending platforms, stablecoins, oracles, bridges, NFT platforms, and domain names.