Tweet Bitcoin, the digital currency that’s arguably one of the greatest social technical innovations since the internet is not without its detractors. Whenever there’s substantial coverage in the press, people are quick to dismiss it as a fad or a scam, likely both. It challenges people’s philosophical understanding of money, and understanding of cryptography and […]
Anyone who has seen the movie ‘The Graduate’ will remember the scene where Dustin Hoffman, then a new college graduate, is whisked away to the back of the house by a gentleman to tell him that he only has one word to tell him, “plastics”. “There’s a great future in plastics, think about it.” Though satirical, it’s undeniable that the growth and use of plastic has skyrocketed since the 1960s when the movie was filmed. If this scene occurred today, with bitcoin substituted for plastic, it’d get some laughs.
I read two interesting thoughts within the past week. One from from a blog post entitled The Blockchain is the New Database, Get Ready to Rewrite Everything, and a tweet that bitcoin is an ultra interdisciplinary field. The first highlights the blockchain as a type of database, where the interaction is distributed/decentralized (are they mutually exclusive) which will give rise to a whole new slew of promising applications premised on decentralization and untrusted third party actors. The second succinctly lists the fields and industries involved when it comes to bitcoin, the currency included.
It’s a given now that the most impactful progress with bitcoin is for applications built on top of the blockchain, as opposed to waiting for the price to lift off to the moon. For those who have not been following as closely, the Bitcoin protocol solves a pretty interesting computer science problem called the Byzantine Generals problem. In short, the thought experiment is as follows: if there are two generals coordinating an attack on a target between the two armies, where the attack must be done at the exact moment (otherwise their armies would not stand a chance) how would they ensure that the message sent by the messenger has not been compromised? How would the generals handle confirmations to ensure that an agreement has been made. How many confirmations are necessary? What if there are 50 equal level commanders instead? This becomes a real issue when nothing can be left to chance. It’s the decentralized consensus, which is an independent ability to verify a message is the message that makes the blockchain so unique. Not everyone is going to need the blockchain, but for the least ephemeral needs, the blockchain is a great and novel solution. When I think of smart contracts on the blockchain, I think about the ultimate in automation – self executing, and involving no human actors. It gives a host of solutions that people have been litigating over in property law for hundreds of years.
Like the internet itself, the industries that bitcoin involves is vast. Law, finance, software/computer engineering, government and policy will have to deal with more bitcoin issues in the coming years. In the instance that bitcoin fails as a currency (absolutely debatable if that is the case today), the technology and implementation of the blockchain will continue to be around in one form or another because the applications, and the mass demand will be around the corner. Blockstream, for instance recently secured $21mm in funding to work on development involving sidechains, which will work in conjunction with the blockchain allowing the possibility for transfer of different asset types – securities, derivatives, in addition to real world currency and real property registries.
Bitcoin, there’s a big future in it. Think about it.