Sunday, 9th October, 2016
| Wait. Look a little closer.
A riddle: what’s important and difficult and hidden in plain sight? Scroll down for the answer.
(Continued in THE TAKEAWAY below)
TOP 5 STORIES ON COINDESK Overstock thinks big. It announced the creation of a blockchain consortium for small businesses, fintechs and startups, called Revolution 4 (yes, really, R4). This is in stark contrast to R3’s gathering of powerful financial institutions. A broader and more diverse group, with an even more ambitious task. Move over.
You don’t say. When Bill Gross mentions bitcoin, you sit up and take notice. Especially when he also likens central banks to “gamblers” and markets to “casinos”. And by the way, gold is a “historic relic”. Gripping stuff.
Private and public. Instead of going the usual route and building a private blockchain from scratch, JP Morgan has created one on ethereum. Advantages? It’s cheaper and faster, and uses a more tested technology. What now?
No privacy, no fungibility. Zcash is generating a lot of interest, as a bitcoin competitor with advanced privacy features. And it just got easier to mine. How?
Should token sales be allowed to continue? An opinion piece on the history of token sales and the regulation (or lack thereof) surrounding them. More here.
More Blockchain News →
QUOTE OF THE WEEK "...Online peer-to-peer communities involve inherently political dimensions, which cannot be dealt with purely on the basis of protocols and algorithms." - Primavera de Filippi and Benjamin Loveluck, The Invisible Politics of Bitcoin |
THE TAKEAWAY
In a week intense with blockchain news, something is happening behind the scenes that isn’t getting much attention. And it’s potentially huge.
I’m talking about bitcoin scaling. Before you yawn and scroll down, bear with me for a few seconds. I have some questions. We all really need to think about the answers.
1) Why is this less compelling than blockchain news? Because it sounds so technical? It’s not nearly as high-profile as JP Morgan’s ethereum private chain, for instance, or Overstock’s new consortium. We can visualize the impact of these items, we can get excited about the new business models. Give me some empire building over routing stuff any day.
2) Why do we think it’s not important? Because it’s been going on for a long time. Didn’t we read about bitcoin scaling problems a couple of years back? Not much has changed since then. The block size is still the same. People are still squabbling about what it should be. Apart from the occasional glimmer of funding and the rare price swing, there’s not a whole lot happening. Bitcoin is becoming, dare we say it, boring.
Here’s why we’re wrong:
There is a lot going on, and it’s profound. Bitcoin is no longer a “new” concept. In cryptocurrency years, it’s a teenager. Ethereum is still a toddler, albeit one that can throw a good party. So are private blockchains. While the toddlers get the family’s attention because they’re growing fast and trying out brave new things, it’s the sulking teenager who is consolidating experience and trying to make sense of the world. Both can get excited about their future. But teenagers have a better feel for what they need to learn, and understand that they need to be careful with their next steps.
Bitcoin is being careful. After the fallout from ethereum’s hard fork, the much-criticized stubbornness of the development team is starting to look more like sensible caution.
It’s also developing new skills. The research activity around the Lightning network is starting to show results. The Scaling Bitcoin gathering this weekend presented new ideas, developed old ones and built on collective knowledge. We’re still a way off from successful scaling, but we’re a whole lot closer than we were.
Successful scaling implementation will open up a new world for bitcoin. Microtransactions and smart contracts on the bitcoin blockchain will kick into gear. Bitcoin’s “usefulness” will move to the next level.
Or, maybe it will arrive too late, and bitcoin will have to cede its place as the most secure and practical cryptocurrency to one of the rapidly growing toddlers.
Either way, the work going on around bitcoin at the moment is far from boring. It may not be flashy. It certainly isn’t loud. But it’s exciting and new, with huge potential business applications, whatever the outcome. It deserves more of our attention.
– N
More background:
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OTHERS ARE TALKING ABOUT...
Some good points about fintech and bitcoin from Finextra. I especially like the one about “concentration of power”. Greenbiz talks about blockchain and energy, a potentially huge use case that could make energy cheaper, cleaner and better distributed. The Observer has an interesting article on land titles and the blockchain. And the Scaling Bitcoin gathering is getting very little coverage from the mainstream press. No surprise there.
UPCOMING EVENTS
RECENT SECTOR REPORTS
WHAT WE’VE BEEN UP TO We’re in Milan!
Pete (@pete_rizzo_) and Ryan (@twobitidiot) braved a transatlantic flight and complicated Italian logistics to be able to bring you reports from Scaling Bitcoin in Milan. Lots to talk about.
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