The individual-based distributed computing model is becoming the dominant paradigm.

Bitcoin adopts a truly distributed computing model, prioritizing security and reliability. Its UTXO model is primarily used for currency transactions with a relatively simple state structure, though scalability remains a challenge. Despite its initial design for monetary transactions, the UTXO model’s core principles can be extended to broader applications, generalizing the concept of “currency” to “everything,” such as:

• ‍Decentralized Identity: UTXOs can represent user identities, enabling decentralized identity management.

• ‍Data Ownership and Storage: UTXOs can signify data ownership and access control, forming the foundation for decentralized storage systems.

• ‍IoT Integration: UTXOs can represent IoT devices’ identities and states, facilitating secure communication and data exchange between devices.

Ethereum, on the other hand, operates on a distributed centralized computing model, akin to early time-sharing operating systems where multiple users share a single machine’s resources. While this model offers efficiency, it compromises individual autonomy and security. In the long run, a model that disregards the growth of individual sovereignty may struggle to become the mainstream standard.

‍I. Core Concepts

Before diving deeper, it’s essential to understand a few key concepts:

• ‍Mirror World: Human society and the digital blockchain world mirror each other, both consisting of individuals and shared spaces.‍
• Blockchain Design Principles: Building a blockchain ecosystem requires respecting individual freedom and shared communication, similar to societal and internet principles.‍
• Bitcoin’s UTXO Model: This individual-centric computation model aligns with these principles but is currently limited to simple monetary calculations.‍
• Extended UTXO: UTXOs, analogous to private endpoints in the digital realm, can be expanded to support higher-value use cases across the blockchain ecosystem.‍
• Bitcoin’s Significance: As a fundamental “mirror world,” Bitcoin provides an open playground to explore a broader value-driven internet.

II. Layers of Distributed Computing in Blockchain

Blockchain’s distributed architecture can be categorized into:

1. ‍Network Layer: The underlying infrastructure (e.g., P2P networks) akin to the traditional internet.‍
2. State Layer: Methods for state storage and updates on-chain, built atop the network layer.

Ethereum’s Centralized Tendencies

Even within blockchain, Ethereum’s account-based model exhibits centralized characteristics. All accounts and states are stored within Ethereum’s global state tree, resembling a centralized server system.

Bitcoin’s Distributed Essence

Bitcoin’s UTXO model allows each UTXO to operate independently, akin to personal devices with standalone operating systems. This truly distributed nature enhances fault tolerance and censorship resistance, essential for building a decentralized value internet.

Hypothetical Argument

Imagine if early computers had only a centralized “Ethereum-like” system where all users had to log into a single mainframe to access the internet. Would the internet have thrived as it has today?

The answer is clear: a centralized system would have stifled innovation and freedom.

III. Analogical Reasoning

Bitcoin’s UTXO model is analogous to individual devices, each running its own OS, emphasizing its inherently distributed nature. In contrast, Ethereum’s account model, centralized by design, is less suitable for building a truly decentralized internet.

Bitcoin: Distributed-Distributed Computing

Bitcoin achieves decentralization at both the network and state layers:

• ‍Network Layer: P2P network ensures all nodes are equal with no central servers.‍
• State Layer: UTXOs operate independently, holding transaction states, enabling individual validation and computation.

This distributed-distributed computing model ensures robust fault tolerance and censorship resistance.

Ethereum: Distributed-Centralized Computing

Ethereum, while decentralized at the network layer, exhibits centralization at the state layer:‍

• ‍Network Layer: P2P network.‍
• State Layer: Account-based model with all states stored in a single global state tree.

This model, though efficient, introduces centralization risks.

IV. Conclusion

Both Bitcoin and Ethereum’s distributed computing models have their pros and cons:

Bitcoin offers a more secure and reliable distributed-distributed computing model through its UTXO system, which, while initially designed for currency, holds potential for broader applications like decentralized identity, data storage, and IoT.

Ethereum’s distributed-centralized computing* model, akin to early time-sharing systems, provides efficiency but at the cost of individual freedom and security. Long-term success in blockchain may hinge on embracing the individual-centric distributed model, making Bitcoin’s approach a strong contender for the future of decentralized value networks.

This version uses crypto-native terms like UTXO, Extended UTXO, P2P, and state layers, while incorporating analogies common in the crypto community to make the concepts more relatable and engaging.