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This post was inspired by a chapter in Andreas Antonopoulosâ incredibly thought-provoking collection of talks, The Internet of Money. Iâd highly recommend reading it; he covers a variety of topics on bitcoin and the impact cryptocurrencies will have on society.
Thereâs quite a lot going on in the crypto space right now. ICOâs left and right. Talks of government-imposed regulations in South Korea. Allegations of a copied white paper, as well as copied code. And now China is cracking down on not only ICOs and bitcoin miners, but centralized exchanges as well.
But thatâs just the bad stuff covered in the media. It sends prices down, so yeah people might be more interested in that.
I think thereâs a lot more going on that doesnât quite have a spotlight on it. Iâm talking about bullshit projects.
A lot of shit is being peddled to investors disguised as innovationâââwhen itâs really business as usual. Itâs pretty easy to capitalize on this crypto craze right now. Take your business idea and write up a proposal, sprinkle the word blockchain here and there, and voila! If you position it correctly in the market and get enough people excited about it, youâll have a decent ICO in the near future.
Okay Iâm exaggerating, but with all these new blockchain projects being announced, itâs hard to believe that they are all truly innovating.
Blockchain is bitcoin with a haircut
Letâs define blockchain real quick.
Itâs a distributed ledger that is immutable and extremely difficult to hack.
Let me expand on that a bit, just in case.
Itâs a record of transactions that doesnât reside on just one central serverâââa copy of it lives on every node of the network. And every time transactions are added to this record, itâs broadcasted to everyone, so everyone gets the updates. Once something is recorded, it cannot be taken backâââitâs permanent. Everyone that accesses its contents can agree on its authenticity without the need to trust each other. Everyone verifies their own transactions, putting the trust on the network and its consensus algorithm.
But thereâs so much more to it!
Itâs open and borderless. Itâs above nation-states. And it doesnât serve any one entity, organization, or institution. Thereâs no such thing as a good or bad actor, legal or illegal transactionsâââonly valid transactions. Consensus rules are followed and smart contracts are executed regardless of the motive. And in order for it to protect all these characteristics, a blockchain is highly resilient and censorship-resistant, making it difficult for any colluding actors to do anything fraudulent or take the network down.
These are the characteristics that make blockchain technology truly disruptive.
However, the blockchain isnât the only technology behind bitcoin. Bitcoin is the combination of four foundational technologies: blockchain, proof-of-work, cryptography, and peer-to-peer network. Without the help of these other technologies, blockchain is nothing more than a data structureâââand a somewhat inefficient one at that. Itâs not really useful on its own.
But âblockchainâ and âdistributed ledger technologiesâ are becoming a standardized way of getting investors and the public excited about technology that they might not quite understand. In Andreaâs words:
Blockchain is bitcoin with a haircut and suit you parade in front of your board. Itâs the ability to deliver a sanitized, clean, comfortable version of bitcoin to people who are too terrified of truly disruptive technology.
Itâs a buzzword. And a sexy one at that. It seems like anyone can slap the word blockchain on their website, iced tea drink, or half-baked idea and bathe in crypto craze gains.
Even Kodak, the camera company who shot itself in the foot when they invented the worldâs first digital camera, wants some skin in the game. They were left in the dust on one digital trend, theyâll be damned if they miss another one. So they created their own cryptocurrency called KodakCoin. And guess what? Their stock saw a 92% boost. No surprise there.
But hey, maybe theyâre on to something.
Business disguised as disruptive technology
The real problem is that some of these âblockchainâ projects arenât really innovating. You can take their white paper and replace every instance of the word blockchain with databaseâââand itâll still read the same. Itâs business as usual, disguised as innovation. Theyâre not building decentralized services as much as they are complicating their businessesâ core offering with technology that is, quite frankly, not ready.
In case you didnât know, an application called Cryptokitties took the crypto world by storm mid-December, bringing the Ethereum network to a screeching halt. All due to a spike in transactions as people were buying and selling⊠digital cats. Thatâs just one application that went viral. If someone builds a theme park or arcade for these kittens using the same infrastructureâââand not using a side chain or another scalable solutionâââthings will go bad.
So, many of the projects touting their innovative solutions that âunleash the power of blockchain technologiesâ will be on a rather tight leash if they are counting on any kind of scalability in the near future.
That is, unless they use private blockchains (like Hyperledger)âââbut then they are literally using a permissioned distributed ledger. In other words, a database.
Boring!
The point of Bitcoin and open blockchains is that they remove the need for a centralized authority. They provide trustless, neutral, borderless, and censorship-resistant platforms to exchange value on. If youâre taking a process and shifting the trust to new intermediariesâââpermissioned blockchainsâââyouâre not innovating.
Youâre just a new middleman. Youâre using this technology to make the same centralized processes more efficient to improve their bottom line.
Looking at you, Ripple.
Is this blockchain or bullshit?
The next time youâre reading a whitepaper or researching a project, use this checklist to decide whether what youâre looking at is actually innovating.
- If you can replace every instance of the word âblockchainâ with âdatabaseâ and it still reads the same⊠itâs bullshit.
- If itâs not decentralized, open, neutral, borderless and censorship-resistant⊠itâs bullshit.
- If it shifts trust from third-parties to new intermediaries, itâs a new middleman, soâŠ. itâs bullshit.
Everyone is stumbling around in the dark and reaching out for ways to utilize this technology. There are no margins here, no real path for realizing its true potential. But somewhere, someone will figure it out. And then weâll start seeing an explosion of creative and truly disruptive ideas.
Thanks for reading! Iâve been wanting to write about this space for a while now, and was getting real fed up with some of the b.s. floating around so I thought heyâââlet me complain about it on Medium. Iâll be writing more developer-oriented posts in the near future.
Clap to 50, why donât you?
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ETH: 0x46AC3404a54B3Eaf8d3EA687a87EaC3BBfb1bd40
Blockchain or Bullshit? was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.
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