Game Changer #2: The Protocol Token

You can’t throw a squirrel online without it landing on an article about blockchain technology. Nothing wrong with that. It’s a pretty big deal in both the financial and tech sectors these days and might eventually change the internet landscape in significant ways.

The thing to keep in mind is that, though the blockchain is usually referred to as some monolithic system, it is actually constructed from a handful of computing building blocks that – taken together – can serve as a decentralized network such as that that underpins Bitcoin.

Here’s what we’re talking about…

Breaking Down the Blockchain

At its most basic, the concept of computing is based on three elements: storage, processing, and communications. Let’s take a look at how each operates within the blockchain infrastructure.


This computing element can be broken down into three types of foundational blocks, known as token storage, database, and a file system.

Token Storage: This first block that makes up the storage element could be simply described as an asset or store of value, whether we’re talking about Bitcoin, digital art, or air miles. The primary duty here, in relation to the blockchain system, is to issue and transfer tokens, and at the same time prevent double-spending and other types of fraud.

Even though it might not be immediately obvious, most blockchain systems contain some sort of variation on the token storage idea.

Database: Even in the decentralized environment of blockchain, you’re going to need a database as a mechanism for storing structured metadata. Not necessarily something exceedingly fancy, just something that supports decentralized control, token support, and is tamper resistant.

File System (Data Blob Storage): The last block that makes up the first element of computing is a file system that will hold large amounts of data. To re-emphasize, LARGE amounts of data.


When discussing this computing element, we’re looking for a system that won’t be thrown for a loop when asked to process in a decentralized environment. This type of processing building block is comprised of stateless business logic, stateful business logic, and high-performance compute (HPC).

The main thing to remember when it comes to stateless and stateful is that the former has no internal state, though can be combined with the latter, which does have an internal state, in order to build large and very secure systems.

The final piece of the processing block, high-performance compute, is the capacity to undertake “heavy lifting” types of projects that might involve rendering, machine learning, or even predictive duties like weather forecasting.


The final element of computing is communications, which can be further divided into the levels of data, value, and state.

Data: Beginning in the 1960s, there were various iterations of networks, but they didn’t really communicate with each other, resulting in limited usefulness. But by the time the 1970s was in full swing, the TCP/IP system was developed as a sort of network of networks, and evolved into the protocol upon which the internet was built.

Though perhaps viewed as “ancient” technology, it still serves as a decentralized solution of sorts for making data networks play nice.

Value: The shortcomings of TCP/IP becomes obvious quickly. The same data packet can be sent to a multitude of destinations simultaneously or even double-spent and TCP/IP won’t care.

Value refers to the mechanism by which value can be shifted over connecting networks but avoiding double-spends, etc. With blockchain, we’ve evolved into a sort of cryptographic escrow scenario that removes the need for a middleman at all.

State: Beyond networks of value, we have networks of state.

Still to Come…

There are no hard and fast rules for how to combine these fundamental elements when it comes to building decentralized systems. Maybe you use two, maybe you use four, or maybe you make up entirely new ones.

That’s the exciting part of being along for the ride into the exciting new technology we call blockchain. The way we define blockchain today might not be the same as tomorrow or in one year, and that’s what keeps the whole thing interesting.

The larger point, as mentioned back at the beginning of this article, is that evolution of the technology will probably make it clearer as time goes by that the word blockchain is too crude a term to describe all the interesting things that are going on under the surface.

This is computing evolution at its finest. If you haven’t been paying attention, it’s getting interesting and that’s won’t change any time soon.