A Real Blockchain is Too Useful to Not Have Full Blocks
In the early days, we would gather in second rate hotel conference rooms sitting on the floor with boxed lunches talking about the wondrous possibility that tomorrow this technology would be real, that it would transform the world and be adopted by the mainstream public.
Tomorrow is here.
In just a handful of short years, blockchain technology has gone from a widely ridiculed speculative experiment to an epic area of international business focus with billions of dollars and thousands of people involved. Today an army of professionals are working hard to help see the technology realize its full potential. One can barely open a business magazine or attend a meeting or conference without hearing the ever present buzzword “blockchain”. We hear talk of massive government initiatives to move things “to the blockchain” we hear about everything from health records to real estate land titles to securities “moving to the blockchain”. Venture capital, angel investment and especially in-house corporate R&D by some of the world’s largest multinationals has been moving at a record pace.
The days of wondering if this will take off are forever in our rear view mirror. Blockchain technology is here and here to stay. One of the most common mistakes made by executives in the blockchain industry is ignoring the largest, most stable, most secure blockchain: the Bitcoin blockchain. There is no “blockchain white paper”, the invention of Bitcoin and blockchain are inseparable. To attempt to separate the technology from its original and most robust use case is a critical error. Proponents of the “Blockchain not Bitcoin” movement are missing a major boat. It’s like saying “search engines but not Google” or “motors but not cars”. It also leaves executives vulnerable to miss out on the significant security and testing hurdles that Bitcoin has overcome. Trade offs of capacity and other features with security are not unique to Bitcoin, all blockchains with any value will face the same issues. Leaders of these projects ignore the learning experiences of Bitcoin and its devs at their own peril.
The foundations in this movement to avoid Bitcoin, the most successful blockchain application today, are not based on foundations of logic or technical matters but typically on PR concerns. Just as the Internet’s early use cases were often underground or illegal, Bitcoin came into view for many tied with an association to the online drug trade or money-laundering. In an extremely fast-growing space this association became outdated years ago. For some time now major companies including Microsoft, Dell, Overstock, Dish and many others have used Bitcoin. Large, legitimate and well-funded companies such as Coinbase, BitPay, Bitstamp and others further solidified Bitcoin as a legitimate form of currency out from the shadows. Unfortunately, some live in the past and fear using the most successful blockchain in there blockchain business ventures because of outdated public-relations concerns.
Regardless of what PR associations Bitcoin may have had, one simply cannot deny it’s success as a robust and stable blockchain app. Executives, consultants and PR experts traveling the world promoting the merits of “blockchain” could often do well to ask themselves the simple and fundamental question: “Which blockchain?” Despite all of the billions of dollars spent on all of the grand hype there’s only one undisputed leader in this technology which has survived and thrived: Bitcoin. Bitcoin has been attacked, stressed, beat up, tested and improved more than all other blockchain applications combined. Many blockchain concepts are not even at the stage Bitcoin was eight years ago. A new blockchain released today which is fully operational on day one will not achieve the test of time and trials of Bitcoin until the year 2025.
Blockchain technology allows some amazing things, however the technology is really only able to live up to its potential when it is decentralized. By nature, a decentralized system is exposed to the world and subject to far more security issues than other models. If you want your blockchain to work and it ends up doing anything of any value or transacting in any token of any value it can and will be attacked. The more successful your blockchain is and the more value it relates to, the more heavy and sophisticated the attacks will be. For years now, Bitcoin developers have dealt with extremely serious security issues which most people can only grasp a basic understanding of.
Why blocks will always be full
It can be reasonably expected that, as more blockchain professionals understand the industry and face their own significant security issues, they will gravitate towards the Bitcoin blockchain for their applications. Why reinvent the wheel and create a new blockchain when you can peg your token, project, currency, smart contract or other application to the strongest and most well tested blockchain? Various projects like Counterparty, Omnilayer, RSK and others seek to blend the power of the strongest and most secure blockchain with the customization and features available from custom blockchains or other successful blockchain projects such as Ethereum.
The Apple App Store now has 2 million apps available. Should Bitcoin maintain its lead is the strongest and most secure blockchain, or even if it remains in the top five we could see not dozens not hundreds but thousands perhaps even hundreds of thousands or millions of applications seeking to use this most secure chain. The greatest blockchain apps are those we have not yet even conceived of. Aside from these apps we have the direct currency ‘digitial gold’ application of Bitcoin and its ever-increasing transactions. Should Bitcoin become as popular as one fifth of visa would be looking at transaction volume thousands of times more than what we see today. One early area of excitement for many involved in Bitcoin was it seamless ability to provide for micro-transactions: ChangeTip, WatchMyBit and other business models attempted to use the low friction involved in Bitcoin transactions for micro-payments. Today, transaction costs are too high for many micro-transaction business models to survive.
In the early days of the Internet one of my hobbies was to visit every single website. As new websites came out I would visit. One day the number of new websites surpassed a few hundred and I said “I have to catch up on this later”. As you can guess, that day never came as hundreds of websites a day soon became thousands. Today no human can hope to visit even a fraction of the total websites published online. Like the World Wide Web, blockchain technology has reached a crossroads. This technology is here and here to stay. Never again will we see the days where a large, proven, stable blockchain like the Bitcoin blockchain does not have a significant number of transactions. We could once visit blockchain.info and wait for up to a minute or two before anyone did a Bitcoin transaction. Today the transactions fly by 24 hours a day seven days a week at a rate so fast you have to do a screen grab to be able to read them. The old days will not return. Satoshi Nakamoto invented a better ledger and the benefits of that ledger are becoming increasingly well-known.
The best ledger in the world will not be empty. In fact, it is so appealing that from today until decades into the future transaction blocks will be filled with large transactions, micro-payments, and other tokens, related blockchains, assets and other currencies pegged to strong chains such as the Bitcoin blockchain. Whether we increase the block size from 1 MB to 2 MB or use Segregated Witness to have an effective block size increase to 2 MB or 4 MB or beyond, the blocks will still be full. We do face a short-term challenge related to capacity but the long-term solution has got to come in the form of off chain scaling.