For sake of clarity, allow me to set the record straight first. Blockchain and Bitcoin are not the same thing; they are not synonyms. Blockchain is not necessarily Bitcoin, even though it's an integral part of it, and Bitcoin is not just a Blockchain; it's a novel autopoietic economic network based on cryptographic consensus, and it has changed the rules of the game.
Just like for VHS, porn was a catalyst for Internet adoption back in the early days in the same way drugs, gambling and porn were for Bitcoin. Now Bitcoin is also acting as a catalyst for its underlying technology, the blockchain, in much the same way e-mail did for the Internet.
It's holonic growth, parts forming wholes that become parts of greater wholes. Bitcoin was the first proof of work blockchain; it was also the first blockchain to exist, and it is the leading decentralized network in terms of capital and user base in the world today.
Many contending blockchains offer more advanced utility and even have a proven use history (e.g, bitshares) yet they lack the network effect of Bitcoin. This is mostly because the proof of work blockchain that bitcoins emerge out from got the economic incentives right; thirst for privacy and greed were the major pillars in this game-theoretically sound experiment. Self-interest ultimately paved the road for cypherpunks, anarchists and libertarians alike.
Ethereum, the decentralized applications blockchain, has shown its first signs of trouble, just like bitcoin recently did within its developer community, and after both the "block size" and "The DAO" debates; it has become clear that beneath the scaling difficulties or security exploits, governance still remains the greatest challenge these crypto-platforms will ever face. Nevertheless, consensus networks (aka blockchains) keep springing up everywhere, each one attempting to fill a specific niche, and they all need a public and permissionless common ground to interoperate.
Bitcoin is clearly poised to fill that role, for emergent complexity, and thus scalability, can be achieved by building on top of its blockchain with layered protocols, just like we did for the internet. We build on top of what works and we keep doing it, ad infinitum. As the old saying says; if it ain’t broke, don’t fix it. If Bitcoin can live through its growing pains, it may as well end up establishing itself as the de-facto settlement layer of this new crypto-economy; a global reserve currency and a reference value network for international commerce.
Bernard Lietaer dreamed of such a world reference currency; after being involved in the design of the Euro he proposed the creation of the reference basket currency Terra, based on a wide variety of assets, in order to curb inflation and foster stability across nations. It may be the case that this marvelous alquemy of mathematics, computer science and economics embodied in Bitcoin ends up becoming precisely just that.
The ability to freely record events in an immutable and distributed database is a major technological breakthrough that has implications for every area of society. Governance, law, identity, registry, commerce and fintech, the major backbone of our civilization, will be restructured by software that is being coded as I write these lines. Smart contracts and Distributed Autonomous Organisations (DAOs) based on different flavors of blockchains will coexist and interoperate in an emergent Distributed Autonomous Society.
Good article, nice writing. Keep 'em coming @etimarcus !
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