Since its emergence more than ten years ago, blockchain technology has held significant potential for decentralization, disintermediation, and radical transparency. Despite the optimistic vision associated with this technology, a stark reality persists: a substantial portion of the data wealth generated on public blockchains remains inaccessible to the average user.
As blockchain integration expands into various sectors such as finance, supply chains, and governance, it becomes imperative for the industry to evaluate whether it has genuinely upheld the core principles of this technology.
Jim Myers, the Chief Technology Officer, and co-founder of Flipside Crypto, underscores these points.
The Disparity Between Promise and Reality
Originally designed as open ecosystems devoid of centralized control, public blockchains were intended to facilitate interactions among participants without intermediaries. Transactions recorded on these transparent ledgers unveil essential truths about economic activities, user behaviors, adoption trends, and other dynamics.
However, despite the ethos of openness and accessibility embedded in blockchain technology, the current landscape reveals a stark information asymmetry. On-chain data analytics, crucial for informed decision-making, largely remain confined within private platforms, shielded behind paywalls, incomprehensible to the average reader, and predominantly out of reach for regular users.
Numerous instances highlight how existing analytics platforms offer valuable insights derived from on-chain data. For example, in February 2021, the U.S. Department of Justice (DOJ) announced the recovery of over $1 billion in bitcoin (BTC) linked to the Silk Road, a dark web marketplace shut down in 2013, leveraging on-chain data from Chainalysis.
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Moreover, platforms like Skopenow could have potentially foreseen the FTX collapse before impacting numerous cryptocurrency holders. While these advancements are commendable, they fall short of fulfilling blockchain’s promise of transparent data accessibility, as these services cater to a niche audience rather than the broader public.
Envisioning Open Data Accessibility
Acknowledging that existing analytics platforms may offer paid services and premium subscriptions is essential. Even in mission-driven enterprises, profitability is crucial, especially in data services where certain customers require more sophisticated and resource-intensive solutions.
In this regard, platforms could allow free users to manually query data, create public dashboards accessible to the Web3 community, and offer paid subscription tiers with enhanced tools for commercial users. These tools may include programmatic data access, priority API queries, and integration capabilities with third-party platforms like Tableau and Power BI.
Additionally, platforms can establish programs that incentivize community members to utilize free data for the collective benefit of users. By engaging thousands of analysts to bridge the gap between complex on-chain data and the general public, platforms can encourage high-quality contributions through shared ownership and exploration.
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While this collaborative model presents an ideal scenario, simpler approaches can sustainably provide free data access to users. Platforms could incentivize users to perform micro-tasks such as data validation, anomaly detection, and content curation in exchange for premium data access or analytics tools, or offer time-based or ad-supported access.
Transparency in this context extends beyond tracking value movements on blockchains to determining who can access information regarding these transactions.
In conclusion, there is a pressing need to align commercial interests with the public good by ensuring open access to on-chain data. Without comprehensive access, researchers cannot accurately analyze patterns, entrepreneurs struggle to identify critical needs, and policymakers face challenges in drafting informed regulations.
Innovation suffers when the collective intelligence of global analysts remains untapped. The credibility of the crypto industry diminishes when flawed analyses go unchallenged. Accessible, verifiable data is essential to dispel the misconception that cryptocurrencies are solely used for illicit activities, despite evidence showing that cash remains the preferred choice for criminals.
Embracing Transparency and Collaboration
The remedy for misinformation and opacity is straightforward in principle: the community must unite to treat on-chain data as the public good it was intended to be. Platforms offering on-chain analytics should prioritize making core data accessible to all users rather than restricting access arbitrarily.
Ultimately, transparency extends beyond tracking value movements on blockchains to ensuring that information about these transactions is accessible to all.
Collaboration with blockchain networks can create additional revenue streams for analytics platforms. While value-added services can be monetized for commercial use cases, fundamental on-chain data, representing transactions across blockchain networks, should be openly accessible by default.
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Unrestricted access to on-chain data yields collective benefits that extend beyond fairness. It enables global talent to challenge assumptions, rectify misconceptions, and enhance systemic comprehension. Such transparency and critical analysis may attract skeptical institutional players to embrace the vision of crypto for the future.
Upholding Data Democracy
Real-world examples abound showcasing the advantages of open data, particularly within the realm of blockchain technology. During the disruptions caused by COVID-19 to global supply chains, the value of blockchain solutions became evident. Companies that had integrated blockchain technology demonstrated resilience by enhancing transparency, traceability, and cost-efficiency in their supply chains.
Those within the industry understand the inherent transparency of blockchain technology, but the challenge lies in conveying this value proposition to a broader audience. To fully leverage the benefits of blockchain technology, open data access is essential to enable a direct evaluation of its real-world effectiveness, rather than relying solely on anecdotal evidence.
For crypto to serve as the gateway to the envisioned web3 future, on-chain data must be readily accessible to all through this gateway. The choice is clear, and the industry stands at a monumental crossroads. The pivotal question that remains is whether the actions of the industry will align with its promises.