Since its arrival over a decade ago, blockchain technology has made great promises in the areas of decentralization, disintermediation and radical transparency. Underlying this visionary rhetoric, however, is a sobering reality: much of the wealth of data generated on public blockchains remains closed to the average user.
As blockchain adoption accelerates across finance, supply chains, governance and more, we as an industry need to reflect on whether we have truly delivered on the technology’s core values.
Jim Myers is CTO and co-founder of Flipside Crypto.
The promise and the reality
Public blockchains are conceived as open ecosystems where participants can communicate without centralized gatekeepers. Transactions taking place on these transparent ledgers reveal fundamental truths about economic activity, user behavior, adoption curves, and other dynamics.
But while the ethos of blockchain is openness and accessibility, the current asymmetry in access to information can be striking. On-chain data analytics – the lifeblood of informed decision-making – remains largely locked in private platforms, behind paywalls, unreadable to the average reader and largely out of reach of regular users.
There are countless examples of how existing analytics platforms provide powerful, consistent insights into on-chain data. In February 2021, the US Department of Justice (DOJ) announced that it had recovered more than $1 billion worth of bitcoin (BTC) in connection with the Silk Road, a dark web marketplace that was shut down in 2013, thanks to on-chain data from Chainalysis.
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Furthermore, the statistics kept by platforms like Skopenow could have helped predict the implosion of the FTX before it impacted hundreds of thousands of crypto holders. While impressive, it still falls short of blockchain’s promise of making data openly accessible. These are premium services that are not available to the average person.
What open data looks like
This isn’t to say that existing analytics platforms shouldn’t offer paid offerings and premium subscriptions. Even mission-driven companies are in business to make money, and when it comes to data services, there will always be a subset of customers with more advanced, resource-intensive requirements.
To that end, a platform can allow free users to manually query data and create public dashboards that the rest of the Web3 community can view and benefit from. And for serious commercial users, these platforms could offer paid subscription levels that provide a more powerful suite of tools, such as programmatic data access, prioritized API queries, and the ability to connect to third-party tools like Tableau and Power BI.
Additionally, analytics platforms can create programs that reward community members who use their free data to benefit their broader user base. These platforms can leverage the collective intelligence of thousands of analysts who act as bridges between the complex world of on-chain data and the broader public, driving high-quality contributions through collective ownership and research.
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While this may be an ideal, mutually beneficial arrangement, there are even simpler ways to provide free data to users in a sustainable manner. Platforms can incentivize users to perform micro-tasks such as data validation, anomaly detection, and content management in exchange for access to high-quality data or analytics tools – or simply provide time-based or ad-supported access.
All this is to say that an attempt must be made to better combine commercial interests with the public interest of allowing open data in the chain. Without a comprehensive perspective, researchers cannot accurately map patterns, entrepreneurs cannot identify the most pressing needs, and lawmakers cannot write intelligent policy.
Innovation suffers because no single analyst can match the collective intelligence of the global masses. The credibility of the crypto industry in general suffers every time flawed assumptions and analysis go unchallenged. Without critical, verifiable data that is easily digestible, the public perception that crypto is only for money laundering will persist, despite the evidence that cash is still king for criminals.
Open data, open minds
The solution to disinformation and opacity is simple in principle: the community must come together and treat data in the chain as the public good it was always intended to be. This means that on-chain analytics platforms should strive to make their core data more accessible to everyone rather than being arbitrarily shut down.
After all, transparency not only concerns the way value moves on blockchains, but also who has access to information about that movement.
Collaboration with blockchain networks can provide alternative revenue streams for analytics platforms. Value-added services can still be reasonably monetized for intensive commercial use. But the basic data about the chain, the fundamental transactions that take place via blockchain networks? Open and accessible by default.
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Unfettered access to on-chain data delivers collective benefits that go far beyond fairness. It would enable global talent to challenge assumptions, clarify misconceptions and enrich systemic understanding. Such transparency and critical analysis may encourage skeptical institutional players to follow crypto’s vision for the future.
Data democracy, if you can keep it
We have numerous practical examples of the benefits of open data. Especially with blockchain. As COVID-19 disrupted global supply chains, the value of blockchain solutions became clear. Companies that implemented blockchain technology proved resilient. Companies improved transparency and traceability in their supply chains while reducing administrative costs.
In principle, people in the industry don’t need to be lectured about the inherent transparency of blockchain. The problem is that the value offering is not fully understood by everyone. But to truly reap its benefits, we need open data access so that everyone else can directly assess the true effectiveness of blockchain, rather than relying on the word of an NFT PFP on Twitter.
If crypto is to serve as the gateway to web3 that we envision, then onchain data must be freely visible to everyone through that gateway. The choice is clear, as is the enormous opportunity at hand. The question that remains is whether the industry’s actions will deliver on its promises.