Open Source: The Essential Feature of Blockchain

By Linda Orenes-Lerma

Open-source is a term you’ll see a lot when it comes to blockchain, but may not understand. Here, we explain the term and why it’s so significant for people like you and me.

Crypto and DeFi are spaces defined by lightning-fast innovation and better options for users – but that’s not down to blockchain alone. 

Blockchain is just one part of an overall shift toward a new internet paradigm, Web3 and as part of that shift we are seeing some big changes in digital culture. A driving factor among these is the shift from closed systems to open source technology.

This culture of technological transparency has been a boon for innovation, disrupting beyond recognition the way business operates and the expectations we have as users. But if your eyes glaze over when you hear technical terms like “open source”, you’re not alone.

So let’s look at what open source means, its implications and how it impacts your user experience.

What does Open-Source mean?

Open-source technology is a powerful concept: it refers to the practice of making source code freely available to the public, or anyone who wants to use it as a base for their own new idea. In other words, it enables a single software to be the foundation for many different innovations, providing the basis for an entire technological ecosystem.

The Open Source Beginnings of the Internet – an why it changed

Many people think of open-source technology as a recent trend, but actually, it was the norm from the very beginning – the internet itself was built on open-source software. But as more and more people started using it, Internet Service Providers (ISPs) saw the huge potential for profits.

ISPs realized that they could make money not just from bandwidth, but also from proprietary services. So they monetized their services by walling off their software coding, which had a number of effects; first, it locked users into a single service provider, since their credentials and any native assets held on that platform (credit, or loyalty rewards for example) would be incompatible elsewhere. It also meant that ISPs could disable any service they wanted. If a company like Comcast, which owns NBC and Universal music, objected to a service like Netflix, they could simply slow down their traffic. Or even block it.

And for the developer community, they could no longer innovate or build on existing services, because the base coding was simply not made available. Less innovation means a poorer user experience. 

In short – closed source technology benefits companies but not individuals. It can be throttled or switched off at any time, doesn’t foster innovation or improvement and limits users’ utility since services can’t be combined. 

Blockchain and a New Era of Open-Source Innovation

The emergence of Blockchain disrupted the old system for a number of reasons. First – blockchain is itself open-source (permissionless), which means it’s open for analysis and free to be built on by anyone. 

But more fundamental to this story is what blockchain enables. The ethos of blockchain is to be a totally autonomous value transfer system, which, apart from being a revolutionary idea in its own right, also makes it a base for infinite applications. 

Ethereum is the main example of this in action – its smart contracts spawned the entire DeFi industry. Developers were able to use Ethereum’s software coding to create functions, and its blockchain to monetize those functions. 

This union of open-source blockchains and open-source software is part of an overall shift toward Web3 and decentralization, distributing access to services and removing our reliance on central entities.

How Does Being Open Source Benefit Blockchain Projects and Their Users?

So aside from the jargon and philosophy, what does the emergence of blockchain and our transition to an open-source ecosystem mean in day to day terms.

Faster Innovation and Better User Experience

Open-source applications allow for faster technological innovation, with more focus on making profit through actual utility, instead of by simply hemming people in. It also means better rewards for users since they can combine multiple services – we’ll come back to that.

Not only can innovation be faster – it can produce more diverse results, since all new concepts have a tried and tested base layer to experiment with.

A Better Balance of Power Between Platforms and Users

When you sign up to a “closed” platform, you need to provide your personal data in order for the platform to identify you and give you access each time you use it. But as you know, that means a big power imbalance for users – businesses that rely on centralized databases for critical business functions, like payments and management of identities have a single point of failure that can be exploited by hackers. Why should businesses be able to accumulate so much information, when we’re already paying for the service?

The open-source nature of blockchain technology on the other hand helps to protect and maintain that all-important transparency. It is better for security as everything is audited publicly, no shady stuff! There is also no single point of failure, which makes it much harder to corrupt. Hacking into one part of the system cannot affect other parts.

Composable services in DeFi

If you’ve ever used DeFi, you’ll know one of its major advantages over traditional finance is composability – the ability to use tokens from multiple platforms and services interoperably. Can you imagine taking your PayPal balance sheet and using it to take out a loan with an online lender? Didn’t think so! 

But in DeFi, you can – and you have the open-source culture to thank for that (well, and a few devs too).

The DeFi ecosystem currently centres on Ethereum, which lets anyone build apps using its programming language Solidity. This means that across the DeFi ecosystem, more or less all services are interoperable, which means better rewards and opportunities for you, the user.

The Growing Metaverse – and Digital Ownership

And beyond DeFi, interoperability is also a canon of the growing Metaverse, as well as web3 gaming platforms. What does this mean for users? 

Well it’s pretty simple – it means you can meaningfully “own” your digital assets and use them freely.

Let’s take an example. In the past, gamers could only use the gaming assets on the platform where they were bought – in other words, you couldn’t bring your virtual football player into Dungeons and Dragons. The two platforms were different, meaning your gaming assets weren’t really yours since they were tied to their host platform.

But the interoperable culture of the Metaverse (and blockchain-based gaming) is different. Say you buy some NFT sneakers for your avatar in Decentraland’s marketplace; your ownership of those sneakers is not tied to the Decentraland platform – after all, that’s not really ownership. Instead, you can take your avatar (and their spiffy new shoes – or car, or pet or spaceship if that’s what you’re into) to another metaverse platform, with no questions about whether your assets are compatible with the technology of that new platform. The same can be said for many in-game assets, which can now be used across a host of other games.

In short, by making platforms interoperable with one another, the end-user (that’s us) is not tied to any one service – and real digital ownership (and freedom) can take shape. This very nature of sharing and building community has fuelled the creation of the Metaverse where anyone can build complex worlds, with rich content that integrates graphics and text, without paying licensing fees or spending years developing the code.

Open Source Technology is Changing Norms Across the Board

As open source becomes increasingly popular and widespread, many business people are looking to leverage the collaborative model to build their businesses. It is a powerful tool for organizations to build and develop software at a low cost, as well as a method of software development that brings together developers from around the world to create better code. This works because the developers can share, borrow, and learn from each other’s code, they build on top of each other instead of starting from scratch every time.

The world is changing, digital is beginning to merge with reality, and interoperability (which brings lifelike freedom to the digital realm) is one of the driving forces behind this emerging culture.

Opening the Door With Open-Source Technology

Open-source technology is more than a collaborative method of developing code: it’s a way to give developer communities an active hand in the development of their own ecosystem, users a better experience, and new ecosystems the chance to flourish freely based on real creativity, rather than the commercial interests they were previously hemmed in by.

The possibilities are endless, as open-source software removes the dominance of big tech from the equation, putting us very much in the driving seat of our own ideas, data, innovations, and projects.

The future is about freedom and creativity, and things are about to get very exciting.

Knowledge is Power.

You cannot imagine how much the Metaverse will change things – get ready for a new generation of gaming, socialising, and even working. Here, School of Block explains what lies in store – and it’s pretty exciting.