Sunday, 4th December, 2016
| Which direction?
TL;DR In a week of milestones for open-source initiatives, we begin to see what the blockchain sector of the future will look like. (Read more in THE TAKEAWAY below.)
TOP 5 STORIES ON COINDESK History meets innovation. The UK’s Royal Mint, which for centuries has been trading gold and minting coins, is building a blockchain-based gold trading platform in partnership with US-based derivatives exchange CME Group. The platform, which aims to offer a more efficient way to invest in physical gold, could become operational as early as next year. Read more.
The SegWit silence. If SegWit is what some call one of the “largest ever” changes to the bitcoin code, why are we not hearing more excitement? In interviews with CoinDesk, several bitcoin startups expressed enthusiasm for the update, and most sector participants recognize the need for bigger blocks. But few are going public. It seems that a reluctance to get involved in politics is holding back the support. Read more.
IRS vs Coinbase. A judge ruled that the IRS can serve Coinbase with a subpoena to access its client records. The IRS hopes to catch those evading taxes through digital currency transactions. Coinbase has repeated its intention to fight back. The news sets the stage for what could be months of legal back-and-forth. Read more.
A big bitcoin bet. China-based Huiyin Group has announced the launch of a $20m fund – Huiyin Blockchain Ventures – for investing in bitcoin projects and initiatives. It has already invested in Indian bitcoin exchange Unocoin, content monetization platform Yours and e-commerce marketplace Purse.io. Read more.
Oops. Ethereum hard forked again over Thanksgiving, only this time unintentionally. The split was the result of different implementations of the protocol. It's being fixed, but sentiment has taken a hit, and the resulting fallout has brought the price down to its lowest level since April. Read more.
More Blockchain News →
QUOTE OF THE WEEK "Will new and sophisticated platforms such as Ethereum be used to widen access to education, allowing students to define and assemble their own mix of qualifications across a range of courses of their choice, from different institutions? Or will the new technology be used by universities to reinforce control, following the lead of the big banks?" – Martin Hall, ‘The blockchain revolution: will universities use it, or abuse it?’, in Times Higher Ed |
THE TAKEAWAY
Amidst the fanfare of the release of R3’s Corda distributed ledger code, another milestone slipped by almost unnoticed.
Hyperledger surpassed 100 members.
On its own, the news isn’t that important – 100 is, after all, just a number. But combine the two reports, and you unearth a development that could define the future of blockchain.
Hyperledger was created a year ago as a unifying “umbrella” for enterprise blockchain open-source development. Among the participants are blockchain companies (including R3), financial institutions and tech giants.
Its approach so far has been a mix of fusion and fragmentation. The blockchain Fabric was created by blending submissions from founding members IBM and Digital Asset Holdings (DAH) to create a flexible enterprise solution. Hyperledger's explorer tool is the result of combining code from DTCC, IBM and Intel projects. DAH recently unveiled Global Synchronization Log, designed to act as a high-level “component” that can network with a range of blockchains.
At the same time as it became open-source, Corda was submitted to Hyperledger, where it will join Fabric, Intel’s Sawtooth and other protocols. Each runs differently, and while all are designed to work with financial transactions, each was created with different criteria in mind.
So it’s logical to wonder whether Hyperledger will apply the unification or fragmentation approach to its newest submission. Will Corda be incorporated into Fabric or Sawtooth? Or will “components” be stripped out to interact with other solutions?
To see where this could go, we need to step back and look at the open source business model.
R3 is a for-profit consortium (currently undergoing a financing round) that has open-sourced one of its main technology assets. Why? To expand its ecosystem, and to encourage developers to improve its functionality. R3 will no doubt charge for related services such as security layers and consulting, and may develop proprietary apps that it can sell to clients.
It therefore needs to be intimately familiar with the underlying protocol, in order to build on it and commercialize the result. R3 is unlikely to consent to the fragmentation of Corda for broader application, or to the technology being incorporated into another protocol (although it probably wouldn’t object to the other way around).
Hyperledger is a not-for-profit group set up and run by the Linux foundation. Their roles are similar: to foster the development of their communities, encourage standardization and add a layer of governance. The foundation has over 200 members, and as well as shepherding Linux, it has a long list of “collaborative projects”. Hyperledger has already started down that path.
As Hyperledger continues to grow, its members’ interests will spread and diverge. The idea of one blockchain for all becomes less feasible, and the necessary investment less practical.
Unlike with the Internet, we probably won’t end up with one technology standard in the blockchain space, however modular. And that’s not a bad thing. Instead of creating a hive of ecosystems competing for talent and users, the initial chaos is more likely to encourage innovation and open up virtually unlimited flexibility. We’re already beginning to see the emergence of a sector in which different solutions are starting to think about how to interact with each other.
We are getting a glimpse what the future of blockchain will look like.
– Noelle
More background:
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OTHERS ARE TALKING ABOUT...
This week saw a broad variety of blockchain topics reach the mainstream press. Forbes published an excellent summary of ethereum’s recent problems, as well as insight into bitcoin’s need for scale and possible mechanisms. Times Higher Ed carried a wide-ranging report on the potential impact of blockchain technology on education. And EconoTimes looked at how bitcoin was affecting the casino industry.
Reason ran a gripping longform article on the risks and rewards of bitcoin mining in Venezuela. Fortune discussed the open source vs patent ideology. The FT published a profile of the Winklevoss twins, and in a separate article asked if the blockchain hype was finally over. Spoiler alert: apparently yes, although I’m not sure how they can tell.
UPCOMING EVENTS
SECTOR REPORTS
WHAT WE’VE BEEN UP TO Things just got a whole lot noisier. Our team is expanding! I’m not going to give details just yet, nor show you photos of our new colleagues’ smiling faces (not today, anyway), but you will soon start to see evidence of our new direction on our web and in these emails. With that, I shall leave you in suspense. I will say, though, that we’re super excited.
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