Blockchains don't have access to data outside of their execution environments. In other words, if it's not onchain it's not "real" as far as the network is concerned.
But this has some real limitations....
Especially if we earnestly believe we can bring 1 billions users onchain in the next 10 years.
Before diving into how we can potentially overcome of those limitations, I want to take a slight pivot, to try and think about the 1 billion users challenge from a first principles perspective.
I like asking myself the question "What's really required to actually bring 1 billion users onchain?"
Which leads to the next obvious next question... "Will it continue to be different flavors of today's blockchain application that push the Ethereum ecosystem towards a billion users onchain?"
Personally, I think not.
I don't think decentralized finance gets us there. Nor do I believe decentralized social gets us all the way there either. While both of these markets have the potential to be significant (in terms of daily active users) I don't believe, alone these blockchain application categories will get us too 1 billion users.
So what will it take, if we believe scaling DeFi and DeSoc isn't the path to 1 billion onchain users?
For starters it will probably require applications of all shapes and sizes.
Which arguably requires escaping the confines of blockchain's current data isolation limitations i.e. being isolated from the rest of the Internet. Forcing us to rethink what the next generation Internet systems and protocols will look like from the ground up.
Zero-knowledge proofs is how we scale to 1 billion users onchain.
And ultimately Ethereum is on a crash-course with zero-knowledge proofs.
It's no secret that Ethereum is following a rollup centric roadmap.
But it's a lesser known fact that Ethereum is working towards an "enshrined zero-knowledge proof rollup" roadmap by snark'ifying the EVM, which was stated by Justin Drake (Ethereum Researcher) in a Bankless podcast "How to Run an ETH Validator On a Smart Watch" with Brian Retford, the previous Risc Zero CEO - which is definitely worth a watch!
But why is this important?
First because it gives blockchains true scale without compromising on decentralization. Second, because it aligns the Ethereum ecosystem, as a whole, with the benefits of scaling next generation Internet systems using the magical powers of zero-knowledge proofs.
Personally I'm not a user of Solana (nor a hater) but I think it serves as a great juxtaposition to the Ethereum mindset and approach towards scalability - a bit like previous generations debates of how to scale the world's electrical grid system.
I'm specifically referring to the 19th centuries debate between direct current (DC) and alternating current (AC) i.e. Thomas Edison vs Nikola Tesla. If you're unfamiliar with the history of how we ended up with today's electrical grid system it's worth a Wikipedia deep dive.
Ultimately what it comes down to, is solving hard problems using brute force vs elegance.
Thomas Edison, the inventor of DC (direct current) wanted to place massive electrical generation systems all over the world. And that's because direct current has a singular drawback - it can only be transmitted a few miles, before the power supply becomes massively diminished. Thus creating the world's electrical grid system, with direct current, ultimately would have required brute force.
Nikola Tesla, the inventor of AC (alternating current) saw a different path forward, which didn't require massive electrical generation systems every couple of miles. He discovered how to transmit electrical power over 1,000's miles from a single source using mathematical elegance.
If you don't how the direct vs alternating current story ends, Nikola Tesla was the winner.
But why is this short history lesson important to understanding where Ethereum is headed?
"History never repeats, but it often rhymes."
If you haven't picked it up yet, Vitalik Buterin is our generation's Nikola Tesla, and his leadership in mathematical and engineering elegance, is what's creating space for humanities next great scaling debate. And blockchains, which don't adopt a zero-knowledge proof centric roadmap are ultimately destined to the same fates of Thomas Edison's approach towards scaling the world's electrical grid system - failure.
Ethereum, by aligning itself with zero-knowledge proofs, is optimizing for the inevitable future.
And that alignment is ultimately what will help bring 1 billions onchain, because the benefits of zero-knowledge proofs extend well beyond scaling blockchains.
Expanding The Universe of Zero-Knowledge Proofs
Let's take a moment to step away from the idea of scaling of Ethereum to 1 billion users and our short history lesson about direct vs alternating current.
And focus our attention towards the broader application of zero-knowledge proofs. More specifically zkTLS and how the digital data landscape will continue to transform in the coming years.
The backbone of the modern Internet is HTTPS.
The most notable cryptography based protocol for securing connections in distributed digital environments. If you're not technical, or unaware of the impact HTTPS has on the modern world, all you need to know is that HTTPS is makes today's current digital financial rails possible i.e. without HTTPS there is no Amazon, Stripe or any number of online based commerce applications.
But can we take HTTPS on step further!?
What if we applied zero-knowledge proofs to the globally recognized HTTPS protocol?
HTTPS is designed to secure connections between a server and browser client.
Ensuring that you as the user are not a victim of a "man in the middle attack" or being served incorrect data. Essentially a cryptographically verifiable "digital handshake" that provides guarantees the data packets being transmitted over the Internet are coming from the domain/server you've established a connection with.
What's important to note though, and what zkTLS helps with, is that this digital handshake is generally used to secure a connection between two parties - it does not extend trust beyond the initial connection and message passing - you can't natively apply HTTPS to a blockchain.
People much smarter than myself have already organized a summary of the importance of zkTLS and how it can be applied, so I recommended reviewing the "Proving new worlds with zkTLS" article for a comprehensive overview of why it's such a groundbreaking approach.
Data is the new oil, as they say. We’ve seen 9 digits deals for selling data during this recent AI craze - and it probably won’t stop for a while (will it stop?).
But datas are obviously constrained : first by FAANG, who tries to limit data portability & availability for customers. When you are lucky and have the possibility to use the API, guidelines are so restrictive that they can prohibit you for using at any time.
At Telah, we’re convinced data portability is going to reshape the Web3 industry. It could be from enhancing the onboarding flow (Privy, Friend Tech) or vampire attacks, redefining the economics of Web2 businesses.
zkTLS is a protocol that creates a gateway between private Web2 data and the Web3 ecosystem. Effectively, it’s a way to enable users to export data securely from any website.
If you read the article (and understood it) congratulations you're light-years ahead of the majority of the world in terms of understanding where the Internet is headed.
If you didn't read the article, the major take-away is zero-knowledge proofs help us unlock a new era of digital data provenance and communicating by upgrading HTTPS, the Internet's backbone,.
The Convergence of Blockchains With the Rest of the Internet
Blockchains have a problem. They're inherently isolated from the rest of the Internet. Unable to consume external data and act upon outside information, unless a third-party brings that information onchain.
But, why is that a problem?
Because a vast majority (99.99%) of the world's data is not contained in a blockchain environment.
Applications, developers and users are unable to build a fully integrated user experience.
Sure, early adopters are willing to put up with a lot of challenges inherit in today's blockchains, but the next 1 billion users likely won't be so forgiving - they'll want results - not necessarily the upside of being an early adopter.
Coincidently we also have another set of users coming onchain, the Blackrocks of the world, who are accustomed to long-running features of the Internet and also have legal obligations and procedures they must follow.
Asset management company BlackRock's (BLK) tokenized asset fund BUIDL became the largest of its kind Tuesday (April 30th, 2024), overtaking rival Franklin Templeton's similar offering just six weeks after its debut.
The BlackRock USD Institutional Digital Liquidity Fund, represented by the BUIDL token on the Ethereum {{ETH}} network and backed by U.S. Treasury bills, repo agreements and cash, now boasts $375 million of deposits after enjoying $70 million of inflows last week, blockchain data by rwa.xyz shows. The fund, created with tokenization services platform Securitize, has captured almost 30% market share since its debut on March 21.
What I'm trying to say is blockchains will need to evolve to meet the demands of new types of users coming onchain. And those demands generally revolve around integrating external data sources into blockchain protocols i.e. access control and policy systems a.k.a fully integrated application experiences.
The Need for Global Access Control & Policy Systems
The cypherpunk in me loves the fact that blockchains are inherently permissionless and open. But the realist in me recognizes these permissionless properties are not inherently the end all, be all.
There is a famous passage from the Tao Te Ching by Laozi illustrates this concept:
"Shape clay into a vessel; It is the space within that makes it useful."
This line underscores the Taoist appreciation for emptiness or non-being, illustrating how the utility of an object often lies not just in its material form, or emptiness, but rather what makes the vessel functional, is allowing "it" to hold things.
It's not always about what you include, but rather what you decide to exclude.
Which is my way of saying that blockchains are inherently open and permissionless, but that's not the only thing that makes them valuable. There is value in making "permissioned" systems: transforming clay into a pot i.e. to hold water, instead of letting it flow freely.
Bringing me to the conclusion, blockchains are analogous to clay, and what we decide to build (include/exclude) with that material is ultimately is what brings value to the world.
Access control and policy systems are how we transform the blockchain into a substrate that brings value to the next billion users. Whether it's the cypherpunk founding an anarchist community or the institutions following legal regulations, what also matters is the ability to decide who to include and what to exclude.
Exploring What's Possible With zkTLS Today
Upon my exploration of today's zkTLS ecosystem I stumbled upon a project worth mentioning. Right now with the Reclaim Protocol you can generate zero-knowledge proofs from HTTPS requests.
As a user you can generate proofs from a significant number of third-paty APIs: Coinbase, Binance, Uber, AirBnB, LinkedIn, Facebook, and a handful of others.
Using the Reclaim Solidity framework you can than integrate these proofs into a smart contract protocol. It's still in the early days, but it's exciting to see what ideas and products will start to emerge from this emerging technology.
Conclusion
Blockchains have not, and will likely never be, an optimal place for data storage and retrieval.
It's simply not what blockchains are designed for - it's intrinsic to nature of decentralization.
Blockchains are great at long-running verifiable compute operations with N number of actors.
Shining brightest when acting as a substrate for processing persistent stateful operations.
When viewed from this perspective zero-knowledge proofs become the answer to... How can we compress/transform data to act as inputs/triggers for a global blockchain substrate without overloading the network?
At global scale every optimization counts.
It's easy to drink the blockchain kool-aid and come to the conclusion that we should just put everything onchain. That we can brute force our way to scale, but we know from modern history that strategy is ultimately destined for failure.
Zero-knowledge proofs are elegance. Championed by our generations Nikola Tesla i.e. Vitalik Buterin. The answer is not to scale blockchains by throwing more compute at the problem, but rather too use mathematical brilliance to compress the world's information into blockchain calldata.
We have to acknowledge the current blockchain paradigm has a ceiling and it's below 1B+ users.
There is a finite amount of experiences and services that can be provided if blockchains continue to be isolated from the rest of the Internet. We must recognize blockchains have a tremendous amount of value in the Internet stack, but they don't replace it.
HTTPS, and by extension zkTLS offers a path forward to integrate blockchains across the modern Internet stack. To bring data from the outside world into a format that works with the unique compute constraints of blockchains.
Thankfully with Ethereum adopting a roadmap where the endgame is enshrined zero-knowledge rollups, it naturally attracts the talent and investment required to make that transition feasible. If there is any blockchain and community that will scale blockchains to global scale it's Ethereum.
