Why previous Blockchains are intentionally limited

Although people may understand that utility is value and value is security, there is still a perception that blockchains cannot achieve both scale and decentralization.

The reason for this is actually quite simple, if viewed from the right perspective. A blockchain is a network application and when we view a blockchain in its entirety and enumerate all of its functionswhich are needed, I.E. the RPCs, we discover that not every RPC is incentivized by the typical consensus.

When we reframe our thinking and view a blockchain as a network application the idea of consensus can be understood more deeply. Although there is a tendency to focus on cryptography and block production in the context of consensus we can also consider consensus over an RPC. Specifically if we consider the incentives for a miner to share a block with another miner, in the case that the first miner has produced the block there is a consensus over the RPC. I.E. the block producer wants to send the block to the second miner and the second miner wants to receive the block so that it can continue to do work at the tip of the longest chain. it is actually the consensus on this RPC that enables the network to function, although many people see it as a sort of secondary effect of the difficult hash algorithum, it is in fact the primary effect which needs to be achieved by the consensus in order for the blockchain to work.

If we consider that data must be shared from the network to wallets and to other nodes which includes things like transactions in the mempool, EVM state data, and peer-to-peer metadata it immediately becomes clear that in fact there is no consensus for these RPCs. For this reason, if a chain is to remain decentralized, it iss critical that these RPCs be provided by volunteers. In order to ensure that the costs for these volunteer remains tolerable, the blockchain must be severely limited. This is why it is understaood that Bitcoin needs so-called "full nodes". This is also why there is a concern around the RPC problem since 2017 and a healthy skepticism towards chains which claim to be able to scale safely without discussing this issue directly.

With this understanding it should be simple to understand that the task of consensus design is to create an incentive for every RPC which is critical to the blockchain's function. This concept is what we call True Decentralization.

However there is still one issue which needs to be resolved. If there is no limit to the size of blocks then there is no limits on supply and demand and there is no mechanism for price discovery. When we say supply and demand we mean supply of transaction processing and demand for transaction processing, I.E. inclusion of a transaction into a block and it's propagation to the network within a block. We call this resource blockspace.

The solution to this issue is discussed in the next section.