1. Breaking Up Is Hard To Do
Our lead story this week is a break-up note to Bitcoin by one of its early contributors. I am talking of course about Alex Waters, former Bitcoin Core Q/A.
Why has Bitcoin failed? It has failed because the community has failed. What was meant to be a new, decentralised form of money that lacked “systemically important institutions” and “too big to fail” has become something even worse: a system completely controlled by just a handful of people. Worse still, the network is on the brink of technical collapse. The mechanisms that should have prevented this outcome have broken down, and as a result there’s no longer much reason to think Bitcoin can actually be better than the existing financial system...
There are many talented and energetic people working in the Bitcoin space, and in the past five years I’ve had the pleasure of getting to know many of them. Their entrepreneurial spirit and alternative perspectives on money, economics and politics were fascinating to experience, and despite how it’s all gone down I don’t regret my time with the project. I woke up this morning to find people wishing me well in the uncensored forum and asking me to stay, but I’m afraid I’ve moved on to other things. To those people I say: good luck, stay strong, and I wish you the best.
The resulting kerfuffle has led to a few quite detailed (and somewhat enjoyable) conspiracy theories on The Internets, mainly saying that R3 instructed Mike as part of some coordinated 'attack' on Bitcoin. If only we had such control over a brilliant mind like Mike. He is a programmer after all...
The New York Times expanded on the above piece with a lengthy article that features Mike pictured mid-coding while ensconced in a chenille blanket. The article also attempts to fill in the other side of the debate:
In the late fall, Mr. Maxwell and his supporters tried to engineer a compromise. They organized meetings in Montreal and Hong Kong where the leading developers met to discuss alternative ways to scale the Bitcoin system. Mr. Andresen went to the first of these, where Mr. Maxwell’s allies announced their own, more gradual plan for increasing the network’s capacity. But Mr. Andresen and Mr. Hearn both felt that the recommendations didn’t go far enough. Mr. Andresen, who is not normally given to sniping, began to harden his position.
“It’s likely that the current developers will get fired, and some other team will replace them because they are not listening to their customers,” he said in an interview last week.
Mr. Maxwell was equally dismissive of Mr. Hearn’s camp — saying that they had politicized what should have been a technical decision. Then he suddenly dropped out of the conversation in mid-December. He has not explained his absence, but colleagues say he was tired of the rancor.
How can the whole thing not make you tired, no matter what 'side' you are on? And as I have mentioned before, this concept of one side or one approach 'winning' over another, or that there even is a contest, baffles me. Success for R3 (or any of the handful of companies in this space) does not need to come at the expense of Bitcoin. It is more likely that traction for either camp would be a massive positive for the other. Put simply: I personally own (a small amount) of bitcoin AND also think that Bitcoin holds little merit for large, regulated financial institutions as it is currently constructed. In the words of William Goldman, "nobody knows anything" but it doesn't stop us all from giving it a go.
2. The Signal from the Noise
As an antidote to the above drama, I present a murderer's row of posts from smart people.
First up, Vitalik Buterin's in depth review on the promise and perils of privacy on a blockchain:
Unlike with scalability, the solutions for privacy are in some cases easier to implement (though in other cases much much harder), many of them compatible with currently existing blockchains, but they are also much less satisfying. It’s much harder to create a “holy grail” technology which allows users to do absolutely everything that they can do right now on a blockchain, but with privacy; instead, developers will in many cases be forced to contend with partial solutions, heuristics and mechanisms that are designed to bring privacy to specific classes of applications.
A companion piece to the above is the latest from Gideon Greenspan, which lays out three use cases for blockchains "given the limitations posed by radical transparency" while also closing on a cautionary note:
So even when the [transparency] technology problem is solved, I think it could still take a long time to overcome the emotional barrier. In the meantime, where does this leave us? With the stark assumption that every participant in a blockchain sees everything else that is going on. While this assumption might restrict the sphere of feasible applications, it will also prevent time being wasted on projects that will never be moved to production. And as others have said before me, 2016 is the year to transition from thinking and talking about blockchains, into building some real applications.
Next up, Alex Batlin gives a great review of his "Blockchain Lenses" approach in filtering out the "put a blockchain on it" method of use case selection. The article is worth a read, but the visual alone is massively helpful.
Couple the above with The Brookings Institute explainer How blockchain could change the financial system and consider your Sunday lessons complete.
Finally, a post by Tony Arcieri of Stripe entitled On the dangers of a blockchain monoculture. The post is fairly dense but has some excellent passages that help cut thru the cloud of hype around the technology:
The only real question is: what can’t you put in the blockchain?
Well, the answer is: not much. [snip] To go beyond that, we need a different protocol. We can’t just throw “blockchain technology” at the problem. The relevant algorithms do not exist in the Bitcoin codebase. We need a different protocol.
[snip] Believe me that I would like to see the craziest fantasies of what people hope to accomplish with decentralized systems realized. But the blockchain is probably not the technology that is going to do it.
In Blockchainiac terms, I don’t want there to be “on-chain” and “off-chain”. I want “sidechains all the way down”. I want systems that are built from the ground up to support that model. Bitcoin doesn’t scale. Decentralize the blockchain!
[snip] I worry the media are giving undue attention to questionable ideas simply because there’s a lot of “buzz around blockchain”. I worry that the hype surrounding the “blockchain” might lead those who award research budgets to favor blockchain-based solutions over those that are blockchain-free. I worry financial institutions might pick a “blockchain”-based solution where a blockchain-free solution might be by all quantitative metrics better in every regard, simply because they’ve heard what a big deal “blockchain” is.
But perhaps my concerns are overblown, and this is just a giant semantic argument. Maybe “blockchain technology” is just becoming a meaningless all-encompassing umbrella term for decentralized protocols. Can it do ledgers? Sure! Data? Why not? Computation? Smart contracts baby!
Perhaps “post-blockchain” protocols will start branding themselves as “blockchain technology” just to stay relevant. “Cyber” is starting to grow on me, so why not “blockchain” too? Who needs a metaverse; I’ll see you on the blockchain.