Shaping Tomorrow: DLT Design & Future Economy Impact

How the design of Distributed Ledger Technology platforms will shape future interactions and the development of the future economy

Futuristic image of blockchain dags in the metaverse

All too often overlooked, the philosophical and technical designs of DLT platforms will impact how the sector and future platforms develop.

Issues related to decentralisation, censorship, inclusion and autonomy will be decided by how programmers design DLT platforms.

“Code is Law” is one of the fundamental tenets for understanding how Distributed Ledger Technology (DLT) operates. How the code is written, and its impact on how other systems operate is beginning to be recognised as a serious issue within the industry.

A problem that’s not often discussed and will be fundamental to understanding how DLT develops in the next decade is the ideological/philosophical differences between different DLT platforms.

Blockchain vs DAG

How people come together in a non-violent consensus and agree underpins the essence of DLT. However, Proof-of-Work (PoW) and Proof-of-Stake (PoS) blockchains enable people to create transactions relying on third parties, block producers or staking pools.

Dependency on block producers and staking pools is an overlooked flaw in the idea that blockchain enables peer-to-peer transactions free from third parties.

Directed Acyclic Graph (DAG) offers an alternative vision for how communities to unite and build free from third parties.

The DAG enables users to create transactions and add them to the ledger without depending on third parties. They have complete independence and control of their funds on the distributed ledger, reflecting a more individualistic set of values.

Impact of Design and Values

Why does this matter? Values matter when building and designing new products and services for people.

How different DLT platforms are designed might impact how platforms and services grow. For instance, a blockchain with a collectivist approach will prioritise the community’s interests.

The individualist design of DAGs might lead to more self-sovereign forms of finance that impact how people store and use their wealth.

In other words: services natively built on a DAG could offer more decentralisation to users. This implies zero censorship, wide availability, and more independence.

Coexistence between different DLT platforms

DAGs and Blockchains can coexist, which isn’t better or worse than blockchains or individualism. Both the blockchain and DAG are just tools and should be chosen according to goals and values.

As shown above, blockchains better align with collectivism, while DAGs align with individualism.

Blockchains are a better fit for tasks where the community’s interests should be prioritised over those of any individual or a minority group.

In practice, the community’s interests can only be expressed through representatives (not directly), and the quality of representation matters a lot.

The representatives are powerful, and if they become subject to outside pressures, driven by self-interest counter to the public interest, or start serving the highest bidder, such a blockchain benefits neither the community nor the individual.

DAGs as a conductor of free will

DAGs, on the other hand, are a better fit for tasks where individual freedoms are of primary concern. The individuals need a neutral, ownerless medium through which they want to do business with each other.

The medium doesn’t impose anything on them; it’s only a conductor of their free will.

Of course, the medium has its rules and restrictions (such as every transaction must have a valid signature and spend existing coins), and these rules are enforced purely by technology and are equal for all.

Building the future

Depending on goals and values, one can choose between a blockchain that operates on a PoW/PoS basis and a DAG.

All too often, when assessing the pros and cons, emphasis has been placed on issues related to utility, such as energy use, transaction costs and time needed to complete transfers.

In the not-so-distant future, however, we might reflect on how culture and values within different blockchains and DAGs helped influence the direction and growth of disruptive technology platforms in the 21st century.

It’s a subject that developers and community members often fail to grasp as we look to build the infrastructure of the future.

About the Author: Anton Churyumov is the Founder of Obyte, a leading Directed Acyclic Graph (DAG) platform.