The Weekend Read: March 6

[Todd is busy soaking up the sun in greener pastures for the weekend. This edition of The Weekend Read is brought to you by Kathleen Breitman, a Strategy Associate at R3.]

1. In the Beginning

A big shout-out and congratulations to our Lab team for putting the rubber to the road with Project Genesis:

“[40 banks] connected to R3-managed private distributed ledger technologies built by Chain, Eris Industries, Ethereum, IBM and Intel. They evaluated the strengths and weaknesses of each technology by running smart contracts that were programmed to facilitate issuance, secondary trading and redemption of commercial paper, a short-term fixed income security typically issued by corporations to raise funding.  

Each of the distributed ledgers ran a smart contract based on identical business logic to enable the banks to accurately compare the difference in performance between them. Cloud computing resources were provided by Microsoft Azure, IBM Cloud and Amazon AWS to host the distributed ledgers.”

Genesis is a modest feat relative to our ambitions, but it’s a critical stepping stone in realizing the (ambitious, much hyped) promise of distributed ledger technology.

2. Into the Ether

Vitalik Buterin conducted a very interesting interview, published Thursday, where he discusses his progress with Ethereum and some potential directions the project will take. Most interesting to me:

“BC: When will the issuance of Ether taper off?

VB: We are planning a proof of stake switch early next year, which will greatly reduce issuance, likely to 0-2m per year.”

Over the past week, the price of Ether has almost doubled while BTC fell 10%. The price of ETH has been correlated to BTC but the two have uncoupled. This pattern hasn’t traditionally happened with an alt coin and it may signal more direct competition between the two.

BTC Last week

[Data Courtesy of Coinmarketcap.com]

At present, it looks like ETH is bucking the trend of most alt coins. That said, this could also be a temporary liquidity issue due to ETH primarily being traded for BTC.

3. On Truth and Lies and “Blockchain”

Computer scientists will tell you that blockchains are not a particularly new application of distributed ledger technology or cryptographic methods. And, though scores of “innovation experts” will tell you otherwise, blockchains are only good for a select subset of business problems. In a closed network, most use cases would be better served by a distributed ledger or a centralized database.

While I appreciate the factual bases of frustration with this newfound interest in “blockchain”, I think it’s fantastic to see many executives start to rethink their approach to data and technology. I try to employ precision in my word choice but, if I have to use the word “blockchain” to communicate a better way to approach a problem, I’m happy to forgo my pedantic inclinations and keep the big picture in mind. 

That said, I do have grievances. Over the past year, I’ve enjoyed talking to many businesspeople about the potential of distributed ledgers and how they can help solve problems. Since my sojourn began, I’ve seen the word “blockchain” evolve from a way to describe the bundling, validation and ordering of transactions, to a way of describing distributed ledger technology broadly. Now, however, “blockchain” has become a catchall for new technology. (Selected turns of phrase now include: “How are you approaching blockchain?” “Are you ready for blockchain?”) In an effort to preserve the word’s meaning, I have created a table for interpreting “blockchain talk”:

Administrative Announcement
I’m speaking at the MIT Bitcoin Expo this Sunday. Please don’t hesitate to say “hello” or drop me a line if you will be there!