What is a public chain?

Concept

A public chain is a blockchain network and a distributed ledger system based on blockchain technology. Its blockchain data can be made public. It allows anyone to join the network and participate in transactions and consensus processes. Therefore, Anyone can view, participate and verify. Another very important point is that the public chain is completely decentralized. It does not rely on a central control agency, but is jointly maintained and managed by multiple nodes. Therefore, a public chain data is open, transparent and immutable.

Features

Decentralization

Public chains are decentralized, with no central node control. All nodes participate equally. This feature can prevent faults and enhance the stability and security of the system.

Openness and Transparency

Everyone can view and verify transaction data on the public chain. Anyone can join the public chain network, participate in transactions and mining, without specific permissions or certifications. The transaction information on the public chain is publicly transparent. The complete history of the blockchain enhances the network’s transparency. This feature can prevent information and transaction data from being tampered with or forged, improving the trustworthiness of transactions.

Immutability

All public chains must use cryptographic principles to protect the security and privacy of transactions. All our transactions on the public chain are immutable. Every transaction and every action on the public chain will be recorded and cannot be deleted or modified after recording. This feature of immutability ensures the reliability and authenticity of public chain transactions.

Consensus Mechanism

The consensus mechanism of a public chain ensures that all participants in the network agree on the data. For example, Bitcoin uses Proof of Work (POW), and Ethereum uses Proof of Stake (POS). The consensus mechanism helps prevent the same cryptocurrency from being used multiple times.

Smart Contracts

Public chains support smart contracts, which can realize automated transactions and contract execution. This feature of the public chain can improve the efficiency and reliability of transactions while also reducing transaction costs.

Development Stage

Three stages of development:

2008-2015 - Enlightenment Stage

Firstly, the enlightenment stage emerged in 2008 with the advent of Bitcoin. This public chain can be understood as a “public ledger”, which was the earliest definition of “blockchain”. At that time, the concept of a public blockchain did not exist, and blockchain could only be defined in terms of a public ledger.

After 2015 - Infrastructure Construction Stage

The emergence of the Ethereum public chain in 2015 signaled the beginning of the era of underlying public chains and the introduction of smart contracts. The development of the public chain at this stage is like the operating system on a smartphone. Developers can code apps, or smart contracts, on this public chain according to their ideas. The role of the public chain is to provide a platform for applications and lower the threshold for application development. Similar to a platform-type product, the public chain supports anyone to build and use decentralized applications developed through blockchain technology on the platform, and allows users to create complex operations according to their wishes, providing a basic template for the development of decentralized applications. Therefore, this stage was marked by the emergence of Ethereum and its ecosystem, which brought about a transformation of the public chain. Compared to Bitcoin, the Ethereum public chain not only supports the transaction of the digital currency ETH but also aims to become a platform for decentralized applications and smart contracts. Compared to the transaction features of the Bitcoin public chain, the Ethereum public chain places greater emphasis on building and running various applications on its blockchain. The scripting language provided by the Bitcoin public chain is very limited, only supporting the most basic transactions and very limited smart contract functionality. However, the emergence of Ethereum at this stage can provide comprehensive smart contract functionality, allowing developers to develop and create complex applications on the chain, such as decentralized finance (Defi) and non-fungible tokens (NFTs). In terms of block transaction speed, the two also have significant differences. About every ten minutes, a block is produced on the Bitcoin public chain, which is very slow. The production speed of Ethereum is roughly between 13 and 15 seconds, making the processing speed faster. In general, the emergence of the public chain in these two stages has qualitative differences, with significant differences in function design, consensus mechanism, transaction speed, fees, and other aspects. Bitcoin focuses more on its role as digital currency, while Ethereum provides a more complex and multifunctional platform, supporting various decentralized applications and smart contracts, elevating the intelligence of the blockchain to new heights.

Current Stage — Ecosystem Competition Stage

Taking the development stage of the mobile phone system as an example, in the past development of the mobile phone system, there have been various different systems such as iOS, Android, and Symbian. After market competition, iOS and Android were finally precipitated. Therefore, we are currently in the ecosystem competition stage of the public chain, with competition on the public chain ecosystem as the main focus, which can attract developers and users to join the public chain ecosystem. Then the tokens of the public chain will also rise in price due to the prosperity of the ecosystem. Currently, Ethereum, as the leader in the blockchain, has scalability issues, such as slow transaction speed and high transaction costs.

This stage of ecosystem competition involves the emergence of various high-quality projects on the public chain. Ethereum’s development can no longer meet the intense demand. The rise and flourishing of NFTs and GameFi have imposed new requirements on the scalability of the public chain. Therefore, this competition stage calls for a superior quality public chain and a better plan to address Ethereum’s current performance issues. This would increase transaction speed and decrease transaction costs. Ethereum emerged originally to solve Bitcoin’s limitation of only maintaining accounts, pioneering calculation and execution functions. Hence, Ethereum has become a leader in the blockchain through continuous development. Similarly, a high-quality public chain is now needed to introduce new performances such as enabling communication, social and other application scenarios.

Components of a Public Chain

Consensus Mechanism

Blockchain can be understood as a kind of ledger. The consensus mechanism is the way the blockchain determines who gets to keep the records. Most public chains’ consensus algorithms are variants of the following three consensus algorithms:

PoW (Proof of Work) — The higher the computing power (computer running speed), the greater the probability of obtaining the right to keep records.

PoS (Proof of Stake) — The more tokens staked, the greater the probability of obtaining the right to keep records.

PBFT (Practical Byzantine Fault Tolerance) — Random selection, which can ensure security and liveliness as long as malicious nodes do not exceed 1/3 of the total.

Virtual Machine

EVM, short for “ETH Virtual Machine,” is one of the core components of the Ethereum blockchain platform. It’s a global, decentralized computer, primarily executing smart contracts and applications (Dapps) on Ethereum, processing and executing code in smart contracts, and ensuring contracts are executed as expected.

Smart Contracts

The type of smart contracts is one of the important factors that determine the cost of development for developers.

Why are there so many public chains?

Just like mobile systems, current market mobile operating systems are left with only iOS and Android. However, before these two systems evolved, people used Nokia’s Symbian system, Microsoft’s windows system for mobile, and BlackBerry’s OS system. Therefore, public chains are currently in a competition stage, with different public chains providing different performance and application scenarios. There are three pressing reasons to transform public chains:

Performance Demand

Public chains provide the infrastructure and computing services for blockchain, which is a decentralized ledger. Therefore, transaction processing performance is an important metric for public chains. The current blockchain leader, Ethereum, has scalability problems - slow transaction speed and high transaction costs. Other public chains that have appeared are all starting from different solutions to solve performance problems and increase transaction speed.

Scalability Demand

The prosperity of DeFi has led to high Gas fees and congestion in Ethereum, a situation that continues into 2021. The rotating prosperity of NFT and GameFi continues to demand scalability from public chains.

Market Demand

During the bull market, the huge demand for various applications allows public chains with fast technology landing and ample funds to take the lead and attract various applications to join the ecosystem.

How to evaluate a public chain?

Performance

Performance indicators: The effect of public chains handling transactions can be measured from two dimensions: TPS, the number of transactions processed per second, and TTF, transaction Time to Finality.

The influencing factors of performance include:

(1) Consensus mechanism: Ensuring nodes are honest and not malicious.

POW: Bitcoin’s consensus mechanism, which proves through the consumption of computing power energy. It has a high degree of decentralization, but poor scalability (processing 7 transactions per second, with a transaction confirmation time of 60 minutes).

POS: Ethereum’s consensus mechanism, which proves by staking Ether. It currently also has scalability issues.

POSA: Binance Smart Chain mechanism, Proof of Staked Authority.

(2) Smart contract: The programming language of the smart contract, such as Solidity, Move, etc.

(3) Node division of labor, number of nodes.

Developer Ecosystem

(1) Virtual Machine: “Ethereum Virtual Machine” (EVM) was initially used on Ethereum to execute smart contract codes and alter blockchain states. If a new public chain isn’t compatible with EVM, the code has to be redeveloped and redeployed on that public chain. This process imposes a cost on developers, as they have to learn a new language. \

(2) Ecosystem Support: This refers to whether the resources backing the public chain are substantial and whether there is adequate support for the project.

(3) Ecosystem Layout: Different public chains focus on different tracks, such as DeFi, lending, financial derivatives, games, NFTs, etc.

Keep in mind, several essential components are required for the launch of a public chain. These include a wallet, blockchain browser, token standard, DEX, lending platform, stablecoin, oracle, bridge, NFT, and domain name.

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