Blockchain and Bitcoin: what is the right question?
Question 1: Is it important to define Bitcoin and Blockchain in relation to each other?
If the etymological definition of Bitcoin combines the “bit” unit of information (the 0 or 1 numeral) and the notion of coin, it symbolizes a unit of account limited to 21 million bitcoins. Bitcoin with an upper case “B” is the open peer-to-peer protocol that enables financial transactions denominated in bitcoins — lower case “b” — the crypto-currency.
The blockchain — chain of blocks — is a distributed database or public registry considered tamper-proof. One can then say that the blockchain is one of the technical aspects of Bitcoin. “Blockchain” technology is one of the components of Bitcoin, it’s “in” Bitcoin, but it can just as easily be operated outside of it.
Ok — so once that is said, we have not expressed anything.
The debate is intense in the community. If for some the blockchain is primarily represented by Bitcoin, the only functional real-case use to date (we will return to it), others come up with endless lists of crypto-currencies or smart contract enabling protocols that can be developed around the blockchain. Example against example, use-case versus implementation projects, crypto-currency concept versus technology.
One can claim a project’s superiority over another, denigrate this or that implementation. Excluding one or betting only on another. But these choices bear no strength, have no weight. They limit the deep thought process required when facing an innovation that is as much technological than conceptual. Andreas Antonopoulous has a nice take on this here:
Question 2: What is the most meaningful debate?
Bitcoin / Blockchain, is the debate important? Yes for the bitcoin community mainly, much less for the general public and businesses.
To explain the differences between Bitcoin and Blockchain, the first step is to list the technical properties of each one, the arguments and issues of governance such as consensus, trust, decentralization and suppression of the third party, open and public protocol.
What is interesting are the concrete results or consequences.
The current use of Bitcoin is “materialized” both by the exchange of capital and money and by the absence of trusted third parties. The organizations — often from the banking world — that are developing new business models today have evacuated any reference to the word bitcoin. They have adopted a defiant posture regarding bitcoin and crypto-currencies in general, evacuating all significant elements of Bitcoin and by-passing all questions raised by this innovation.
And, by identifying specific technical properties of the blockchain, they found keys for a “business optimization” that would not require a profound overhaul of the existing framework.
In the world of uses, the main question should be “what will count the most and what kind of impact will this have?” Questioning the major aspects of a decentralized protocol, allows us to identify the real issues and map out a possible future.
Question 3: Do we need to master all the properties of the blockchain right now?
Bitcoin is a reality that has been working for years. This protocol opened a new field for a “legal” framework (in the sense that “code is law” and architecture is politics). It gave power to the “periphery” without a controlling body. This is probably a civilizational change, but understanding it is difficult and its adoption is not yet massive.
Let’s take a closer look.
Bitcoin is the creation of an open and comprehensive payment system. The most cited properties are
● Open, global, Transnational
● Censorship resistant
This structures what Antonopoulos describes as “the internet of money”. Some of these features are still fragile (see previous articles) or weakened by external decisions. For if political decisions are made on the basis of a reality, the more “tangible” bitcoin is, the more regulatory barriers develop.
Blockchain is often compared to the TCP-IP protocol which allows internet browsing which triggered the massive use of what has been called the “web”. The blockchain allows direct access to a much larger whole.
Depending on one’s point of view, the properties noted are less political than related to uses.
Some examples of terms cited
● Immutability with POW (proof of work)
● Censorship resistance /Usability /Reliability
● Resilience/ transparency /efficiency
And the extended or generic definition can then cover public blockchains to private Distributed Ledger Technology (DLT) blockchain managed by people or structures that own it.
In theory, the blockchain seems to be able to “solve” all transaction problems when no large-scale use case has been put in place (except Bitcoin!).
It is also a stack of complex technologies that entails a risk of misunderstanding in these different stages. The misinterpretations of these specificities (or gains) are high and can lead to many failures. The promise is so beautiful that some develop tools to identify if projects fall into the blockchain “box” : https://theblockchaincanvas.com/
If innovations are developing more and more, it is obviously (more?) important to know what the blockchain does not yet do and helpful to study the recent list of William Mougayar (http://www.coindesk.com/blockchain-2017-know-dont-know/).
Question 4: A revolution or an evolution: an attempt to answer
However, blockchain has been “adopted” as an innovation technology, and according to the 2016 Gartner curve we are entering a phase of maturation. There are different aspirations and sometimes totally opposite visions that are available to us: from the complete removal of third parties to the optimization of a business thanks to this technical innovation (almost like another), the palette is as wide as the properties of Blockchain …
We can list use cases ranging from BtoB to examples of everyday life, examples are not lacking: banking sector of course, intellectual property, insurance, health, energy, vote, identity, notary, etc.
But the blockchain will be … what we will do with or will be according to who will do it
If the governance of a blockchain is private, privatized or public, access to information and transaction validation levels will be different and the responses will probably be very far from the initial usage properties. The blockchain’s characteristics will be modified leading us to see not one blockchain but potentially hundreds of possible blockchains.
In this hypothesis, three main items are at stake:
In this hypothesis, three main items are at stake:
1 / The organization of standards and protocols:
To ensure organized, global development. There are several examples of how standards can be created or adopted: if the Bitcoin Core community maintains code in open source, the Linux foundation — an eminent representative of the open source movement — created “The Blockchain for Business” with leading financial and banking players (including IBM). Finally, some governments, such as in Great Britain in 2016 from a scientific point of view, also want the creation of standard.
2 / Technological control and its capture
Because there is a risk of imposing or creating a dependence on a type of use (like software) related to paid services today some actors such as IBM have jumped in, with the hopes that this could provide large positive externalities.
3 / The Forces of Expectations
There may be more questions than answers in this article. Yes, we want answers and certainties above all. Explanations are rarely welcome. Just like the IT guy who comes to your office to explain why your computer does not work. You probably want to tell him that you don’t need to understand why it doesn’t work and you’re not looking to learn anything. All you want is your computer back! (by the way, fast would be better).
The blockchain is a promise of decentralization which carries “new hope”.
The phenomenon of recentralization of the web seems to be stronger than ever and today part of the public realizes the limits and dangers (surveillance, technological dependence). Blockchain comes with a promise of that tools are now available to reenact the original vision that the founders had for the web.
Unfortunately, centralization of the web is real and, great is the risk that actors will try to seize for their own benefit some of the technical aspects of blockchain technology, without its political or sociological aspects. Will blockchain see platforms ruin the dreams of decentralization? Will this new “space of trust” between peers and over insecure networks be maintained? Will the principle of breakthrough innovation prevail over improvement innovation?
This obviously is what remains to be discovered over the next five to ten years