This post is part of a series on how everyday investors can understand blockchain networks like Solana, Ethereum and Bitcoin.
When we think about public infrastructure, we usually think of roads, public transportation, electrical grids, and the internet. This public infrastructure is open and reliable. As such, we can, and do, depend on it.
Blockchain networks are no different. These public ledgers are open. Anyone can use them, without permission. These public ledgers are reliable. Anyone can verify their solidness, because they are built in a transparent way. As such, we can depend on them
We depend on public infrastructure like roads, plumbing, and the internet for movement and communication. So for what can we depend on blockchain networks? Let's take the example of the Solana network, one of the most widely used blockchain networks. Last year, last month, yesterday people depended on it for coordinating economic activity online. Tomorrow, and the next day, and the next, people will depend on it for coordinating economic activity online.
So, what's one answer to "What are blockchains?" Just a new form of public infrastructure. Read on to learn exactly how blockchains are public infrastructure.
Blockchains bring efficiency like public infrastructure
Currently, when you use a bank or brokerage, your money and transactions are recorded in that company’s private ledger. Each company keeps its own ledger, and those ledgers do not automatically connect to each other. Moving money between institutions often takes time, fees, and multiple steps because separate systems have to coordinate and reconcile their ledgers. If you’ve ever tried moving stocks from one brokerage to another, you will know this process can take anywhere from 3 to 10 days. This is the result of different systems trying to coordinate.
For a non-financial example, imagine New York City with multiple subway companies instead of one unified system. To switch lines, you would need to exit through one fare gate then enter a different company's system through a separate fare gate. This adds friction and time to your commute, even though they are both part of the same trip to you. In fact, the New York City subway was like this until its unification in 1940.
Much like subway unification in the 1940s, public blockchains propose a replacement for a fragmented system: a shared digital ledger. Instead of each company maintaining its own private ledger, transactions are recorded on a public ledger that anyone can inspect and verify. Everyone uses the same system of record. This allows value to move directly from one person to another, just as people now move freely within the New York City subway system.
For everyday investors, this would make it possible to move stocks from one brokerage or interface to another in an instant. Public infrastructure for finance can mean fast transfers and simple coordination across the entire economy.
Blockchains have transparency like public infrastructure
Transparency is another key advantage of public financial infrastructure. In private systems, users must trust that companies are recording transactions correctly. Internal failures can't be detected by members of the general public, and users have little visibility into what is happening behind the scenes. On public blockchains, every transaction is visible and verifiable. Anyone can independently verify things happening onchain.
This is similar to how public infrastructure like the internet is built on transparent protocols. Allowing anyone to openly, clearly review what is happening brings trust to the system. This is instead of relying on promises or incentives.
Blockchains have neutrality like public infrastructure
Public blockchains also offer neutrality. The systems around private financial platforms are walled gardens. That is, one cannot simply show up and plug into them. Unless you have explicit permission or the private financial platform has decided to give specific API access, you cannot access the system. Private financial platforms decide who can plug in, when, for how long, and at what cost. This creates barriers for developers, locks users into closed ecosystems, and prevents innovation.
Public blockchains, on the other hand, operate much more like roads, sidewalks, and plumbing. These are open networks governed by shared standards. Anyone can "plug in," so long as they follow the correct patterns for doing so. A great example is connecting a new business's plumbing to a city's plumbing or road infrastructure. This allows the business to do what the business does, not focus on developing plumbing or roadway expertise. This openness makes business formation easier. It also makes it easier for users to move freely within the open ecosystem.
Conclusion
In simple terms, blockchains are public infrastructure for the digital financial world. They provide shared rails for trust and value, just as roads provide shared pathways for transportation and the internet provides shared pathways for information. By creating open, neutral, and resilient financial systems, blockchains have the potential to make digital commerce more transparent and efficient for everyone.