Does Real Identity Matter for Networks? Why Sharding is Great: Demystifying the Technical Properties

Does Real Identity Matter for Networks? Why Sharding is Great: Demystifying the Technical Properties

Introduction:
When it comes to building successful network businesses, Founders often face the question of whether to tie user profiles to real identity or allow for more anonymity. This decision has a significant impact on the growth and sustainability of the network. While networks that allow for anonymity may experience initial growth, they often struggle to maintain value in the long run. On the other hand, networks that require real identity in user profiles tend to have higher user engagement and stronger network effects. In this article, we will explore the importance of real identity in networks and the benefits of sharding for scalability.

Real Identity and Network Endurance:
There is a strong correlation between tying profiles to real identity and the long-term success of a network. Although it may be challenging to convince users to use their real names initially, the commitment and engagement that real identity brings to a network is worth it. Platforms like Facebook and LinkedIn have thrived because they created an environment where users felt safe and comfortable using their real names. This led to stronger network effects, as users became more committed and invested in the platform. However, networks that allow for more anonymity often burn out and produce less value over time.

Semi-Pseudonymous Networks:
While networks like Twitter, Reddit, and Snapchat use usernames that differ from people's real names, they have still managed to sustain themselves. This is because their user identities are persistent over time and partially tied to real-world identities. Users emotionally invest in creating and maintaining their reputations, even in a semi-virtual setting. These semi-pseudonymous networks have strong enough network effects to fend off competition because they provide users with a persistent online identity to which they commit.

The Importance of Engagement:
Engagement plays a vital role in the success of network effects. A dense and highly active network will always outperform a larger but less active one. Therefore, it is crucial for network businesses to prioritize user engagement to maximize the strength of their network effects. Starting with a small, highly engaged user base and expanding from there is often more effective than trying to reach a large number of users without ensuring their commitment to the network.

The Power of Sharding for Scalability:
The scalability trilemma states that blockchain networks can only achieve two out of three properties: scalability, decentralization, and security. Sharding is a solution that addresses the scalability challenge in blockchain networks like Ethereum. By randomly splitting up the verification tasks among different groups of validators, sharding allows for the processing of more transactions while maintaining decentralization and security.

Sharding Through Random Sampling:
In sharding, the work of verifying transactions is randomly assigned to different validators. Each group of validators assigned to a task is called a committee. This random sampling prevents an attacker from concentrating their power on one shard, ensuring the security of the network. However, tight coupling is necessary to avoid any compromise in the integrity of the chain. If even one shard contains a bad block, the entire chain reorganizes to eliminate it.

Improving Sharding with Better Security Models:
While sharding provides scalability and maintains security to some extent, there are still vulnerabilities that need to be addressed. Sharded chains relying solely on committees are susceptible to adaptive adversaries and have weaker accountability. Data availability sampling also requires a sufficient number of online clients to ensure security. Additionally, sharded blockchains depend on sharded peer-to-peer networks, which are easier to attack due to fewer nodes.

The Alternative to Sharding: Centralized Production and Sharded Verification:
Another proposed solution to scalability is a chain structure that combines centralized production with sharded verification. This approach allows for high transaction throughput while utilizing sharding for validity and availability verification. However, it poses risks such as the difficulty of detecting censorship by block producers and the vulnerability to external censorship. Centralized infrastructure also increases the reliance on a few companies' cloud services, increasing the risk of the chain going down.

Actionable Advice:

1. Prioritize user engagement: Focus on creating a highly engaged user base rather than aiming for a large number of users. The strength of network effects depends on the level of activity and commitment from users.

2. Consider the benefits of real identity: While allowing for anonymity may lead to initial growth, networks tied to real identity have shown greater endurance and value over time. Encourage users to use their real names by creating a safe and trusted environment.

3. Evaluate scalability solutions like sharding: If you're building a blockchain network, consider implementing sharding to achieve scalability while maintaining decentralization and security. However, be aware of the potential vulnerabilities and challenges associated with sharded networks.

Conclusion:
The question of whether real identity matters for networks and the benefits of sharding for scalability are crucial considerations for network businesses and blockchain networks. By understanding the correlation between real identity and network endurance, and the technical properties and challenges of sharding, founders can make informed decisions to build successful and sustainable networks. Prioritizing engagement, promoting real identity usage, and exploring scalable solutions like sharding can significantly contribute to the growth and value of network businesses.