Early this week, a16z team lead by Andreessen Horowitz launched the Crypto Start-Up School publishing course videos to the public. In partnership with TechCrunch, a16z is releasing new course modules every week in an effort that insights contribute to The Idea Maze, a culture of startups where ideas and concepts matter, rather than fully relying on execution for success. This week, a course on Blockchain Primitives: Cryptography and Consensus led by Prof. Dan Boneh of Stanford was published contributing to a lecture on the consensus work layer of the blockchain providing some insight on the current age of experimentation and where it may lead in the future.
A simple theory covering the core principles of social life — consensus is the idea of seeing common experiences, interests, and values as the defining characteristic of a population or society. This theory, old as human society, plays an important role in the equilibrium and agreements of social systems contributed every day. In the age of COVID, this is seen as a consensus on how to respond to a global pandemic, when to remove shelter-in-place policies, and how to respond to the uncertainty of the economy. In finance, this theory plays an important role in market consensus as a method of guidance in the capital markets to determine future assets, confidence, and value rather than taking the approach of speculating future values.
Seen in current events, this is important after companies suspended earnings guidance as the economy started to slip early last month. An article on Marketplace covered the story as companies withdrew from quarterly and annual guidance practices, stating “it would be almost irresponsible for them to be able to provide guidance when they, themselves, don’t really have a full understanding of the effects this pandemic is going to have on their bottom line.”
In the age of uncertainty, the future of the blockchain will be based on building this concept of consensus into a platform that allows buyers, sellers, and intermediaries in the capital market to create a consensus on forward-looking policy, transparency, and communication that will lead in financing humanity’s next ventures.
The Consensus Layer
The Consensus Theory in the blockchain begins by ensuring that everyone sees the same thing, continuing by ensuring that anyone can add data on an open system, and finally ensuring the persistence of data, never allowing it to be removed; building self-regulated principles. In this week’s module on Cryptocurrency and Consensus, Boneh points out that currently if one is to participate in purchasing or buying digital assets, the consensus is created by a central authority; there is no choice. The blockchain provides a platform that if you have an issue with custody, enforcement, or any other regulations of those assets, individuals can have a choice for consensus, entering a transaction to allow further translating consensus bringing a diversity of users into the conversation.
Imagine that — you can join a banking platform, where you can see all data in real-time and contribute to the final objective of policy, transparency, and communication. As someone looking to fundraise, invest, and trade assets, you no longer need to rely on an institution who creates the rules that favor self- and share-holder benefits. Seeing the historic collapse in American employment the growing gap between Wall and Main Street requires new options to innovate economic resilience.
The current ecosystem of DeFi, currently in the age of experimenting architecture, is building the roadmap to ensuring consensus is determined by the users and for the users.