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Why Are We Still Building Blockchains? What Happens When Blockchains Die?

Last Updated March 21, 2024 1:45 PM
James Morales
Last Updated March 21, 2024 1:45 PM
By James Morales
Verified by Peter Henn

Key Takeaways

  • People continue to build new blockchains even though so many already exist.
  • With new platforms popping up all the time, some older ones are slowly becoming obsolete.
  • going forward, blockchains will start to die, but will they fizzle out slowly or implode dramatically?

Since Bitcoin kicked off the blockchain revolution, over a thousand sovereign chains have come out, while new ones launch all the time. But do we really need them?

The possibility of blockchain saturation raises the prospect of blockchain death. This is, currently, a rare phenomenon that might become more frequent in the years ahead. Already, several platforms are all but irrelevant. Yet they continue to trudge on – zombie chains kept on life support by a handful of die-hard believers. 

The Slow Death of Obsolete Blockchains

There are plenty of examples of blockchains that were once the next big thing but have lost their sparkle in recent years. While platforms like the EOS Network and Bitcoin SV still have their proponents, they never quite lived up to their initial hype.

Discussing the matter with CCN, veteran Web3 founder Chris Swenor  uses the analogy of a dying star.  He said: “Sometimes there’s a supernova and sometimes it just peters out. I think that’s how blockchains will work as well.

“What will end up happening is that as people stop caring about blockchains, the price [of their native tokens] will go down.”

As a result, he said, “people will stop running nodes.”

Of course, once a network shrinks to a certain size, it becomes more vulnerable to a 51% attack. 

In the supernova scenario, “if the security of the chain goes down faster than the actual value of the chain, what will end up happening is somebody will hack the chain and make the value worth zero”.

Meanwhile, “if the value of the chain dies slower than the security of the chain, it will just slowly go to nothing”.

Building New Chains

While many blockchains that exist today are already on the path to irrelevance, that hasn’t stopped people from building new ones.

Swenor’s latest project is a new Algorand chain called Voi, which should have its mainnet launch in the second quarter of this year.

The initial inspiration for Voi, he explained, grew out of a sense the crypto space had strayed from the ideals on which it was founded. He addedL

“In 2022, I started to look around and I said wait a minute – what it is today is not why I got into it. The VCs (venture capitalists) own everything. I looked at the stats and something like 90% of all tokens are held by 1% of holders. This is the opposite of why we got into this.”

However, while Voi’s inception may have been motivated by ideals, Swenor knew it would need a unique selling point to be viable. Drawing from his experience as an entrepreneur, he decided to initially focus on a single use case before expanding more broadly. 

He said: “What we did is we looked at all of the major industries out there. The one that we saw a lot of opportunity with, because blockchain can help right away, is membership infrastructure.”

Industry-Specific Blockchains

As Swenor described it, the plan for Voi is to “own the niche” by doubling down on features that offer the most value to loyalty schemes.

That does not just mean building strong technical foundations for developers. It was also have to ensure everyday users can connect without needing any specialized knowledge, he added.

One of the biggest selling points of on-chain membership programs is that they enable loyalty points (e.g. air miles or supermarket rewards) to be transferred across providers. 

This creates an incentive for scheme operators to organize around the same platform. One could say the same thing other industry-specific blockchains, too.

To imagine what the future might look like for Voi, it is worth considering another chain that was built with a specific purpose in mind.

The Appeal of Specialized Platforms

Since its inception in 2017, XDC Network has carved out a niche in the field of real-world asset tokenization.

Discussing the journey so far, XDC Foundation executive director Billy Sebell observed that partners like Tradeteq and Securitize were drawn to the specialized tokenization platform for its compliance-first design.

“Everything that we’re offering through them is fully KYC. It’s SEC-compliant. We’ve got [Special Purpose Vehicals] that are set up to handle the legal side, with all of the proper documentation.”

Ultimately, people like Sebell and Swenor demonstrate why new blockchains continue to arise. 

Sure, the likes of Ethereum could do Voi and XDC focus on, but not nearly as easily or efficiently. 

General-purpose chains have their place. However, the ongoing development of new blockchains demonstrates the continuing appeal of platforms that are tailor-made for specific functions. 

Whether they slowly wither and die or explode in a blinding supernova, some of these will almost certainly fail. Nevertheless, the crypto space remains imbued with the spirit of innovation. Perhaps every failure is just a brick on the road to success.

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