Blockchain Levels

Level 0 - Bitcoin

Bitcoin is the King.

I buy the narrative. It’s the first one. Created by a noble and mysterious anonymous genius. Who disappeared and left the project to the community. Saint Satoshi Nakamoto.

It’s energy converted to entropy and stored in a decentralized peer-to-peer network. The digital energy, the algorithmic scarcity, the digital gold. There will be only 21 million bitcoins, 21¹⁴ satoshi ever.

Many believe that, so be it.

Bitcoin is reasonably simple, fairly stable. No hard forks since 2013 in Bitcoin Core.

Bitcoin is unusable as a currency with 10 minutes blocks and 7 transactions per second. It’s a store of value, not a currency.

Bitcoin is the Level 0. The Base Layer. The Sound Money in a world of Broken Money.

Level 1

We need to move money faster and cheaper. We need tokens. We need smart contracts.

Blockchain of this level still needs to be decentralized, but it doesn’t have to be Proof-of-Work.

All it needs is a secure, trustless and decentralized 2-way bridge to Bitcoin.

These are my criteria for Level 1 blockchain:

• Proof-of-Stake
• Secure
• Decentralized
• Stable
• Fair distribution
• Smart Contracts
• Multi-asset
• Efficient Zero-Knowledge Proofs
• Fast

I prefer Nakamoto Consensus over Byzantine Fault Tolerance as it’s more secure and decentralized.

I see only two options here: Ethereum and Cardano.

Everything else is lacking in one or more of these criterias.

I think that Cardano is just a better technology than Ethereum.

• Cardano Ouroborous liquid Proof-of-Stake is better than Ethereum’s slashing Proof-of-Stake:
  • it’s more egalitarian as validators don’t have to be rich to participate
  • stake is not locked and never at risk of being slashed
  • peer-reviewed with a formal proof of security
• Cardano’s governance is better than Ethereum’s lack of governance
• Cardano never changed its monetary policy
• Cardano’s eUTxO model is a better than account model for zero-knowledge proofs
• Cardano transactions are deterministic, no wasted gas fees
• I believe that Cardano’s limited cap of Ada is better than Ethereum’s adaptive issuance model
• Cardano Native Assets are better than Ethereum ERC20 tokens
• there are further improvements in Cardano’s roadmap.

Cardano is Level 1.

Mutli-asset, eUTXO, predictable fees, deterministic transactions, smart contracts, zero-knowledge primitives, 20 seconds blocks.

Level 2

Fast BFT chains can become Level 2 sidechains of Level 1 blockchains. This is already happening with Cardano and Hydra, Cosmos and IBC, Polkadot and parachains.

We can build a Lightning Network or Ark Protocol on top of Cardano, and it will be more secure and decentralized than Bitcoin’s Lightning Network.