The point which needs concession is that if Bitcoin weren't worth money, its infrastructure wouldn't be built so well. The warning is that just because a currency is metric, as opposed to Imperial, doesn't make it superior. All Bitcoin can do is gain market share; it cannot determine the shape of that market. What is there to predict? What there is to predict about Bitcoin is that it smells like a data haven, and seeks the complete and total isolation from 'evil' governments and authorities that makes it draw the untrustworthy. If that's all we may be, then Bitcoin may be our own hope. But I think in that limited view of humanity is a grave mistake about what commerce actually is and what it should be.
In other words, Bitcoin establishes a 'trust nothing, validate everything' standard that inherently trusts algorithms and inherently distrusts humans. It's attractive and repulsive at the same time, because it must attract actors that trust no one. Are such actors trustworthy? The Bitcoin system assumes that it doesn't matter. Everything that contributes to the inviolability of the system must ultimately be accepted. In other words, it assumes a million monkeys will inevitably give rise to an emergent Torvalds, and that good things will follow. The problem is that nobody is quite sure how big such a swarm of hive minded machines running the algorithm must be. So there is a kind of overweening faith (yes I said faith) that Bitcoin or any such currency so dedicated and consecrated must be, by definition, too big to fail.
This seems to be the article of faith. Bitcoin is too big to hack, and too distributed to destroy.
I suppose I wouldn't have a problem with that if the fans and evangelists of Bitcoin weren't aiming to be disruptive. But then again, Bitcoin is Bitcoin and currently inseparable in the popular imagination from the blockchain. But a blockchain is just an audit trail. Its trick is having a trustless blockchain, and the ultimate difficulty with a trustless blockchain is that it's slow. So the objective for me and people like me is to figure out how to define what's in between. That is to say, in order to sustain a market for distributed blockchain auditability, do you need a cryptocurrency?
Half the battle then is trying not to let your head explode when considering what we actually trust humans to do. That's a social difficulty right now for the generation and segments of society that take short attention span theatre seriously. It would be difficult to convince anyone in thrall to the trainwreck drama of our current presidential politics that there are large, strong and trustworthy institutions in this country that aren't petty and corrupt. That's a large problem because the public imagination is captured by that dysfunctional stream. But let us presume that there are a class of people, let's call them Swiss Bankers, who still can be trusted to manage semi-autonomous systems in a perfectly responsible manner. And I do me perfectly responsible.
I am of two minds when it comes to the question of insurance. Insurance is easy to understand and accept. If you don't trust cryptocurrency and you're focused on who is dealing drugs and who is hacking miners, then you can add the side business of currency insurance. Something less than the full faith and credit of the US government is required for a market of something the size of global marijuana and heroin. So an economy of that scale can work. (Fill in blanks here with details). But such a market is not insured.
Well, this is all about the 'libertarian' aspect of blockchain tech liberation, and that is only of passing interest to me. What is of more interest is the ability that instant settlement and value chains bring to civilization. More about that next time. I've met some of the people who have done this thinking before, thank god.
My main questions at this point around this ledger tech are the following:
- different trust models
- transaction speed
- asset tracking
- on chain vs off chain data
- identity management & complex ACLs
- off chain data mirrors
- reference data
- non-financial applications
- energy efficiencies in mining