Is a Blockchain a Blockchain if it Isn’t?

Anyone who has heard of Bitcoin knows that it is built on a mechanism called The Blockchain. Most of us who follow the topic are also aware that Bitcoin and the blockchain were unveiled—together—in a whitepaper by a mysterious developer, under the pseudonym Satoshi Nakamoto.

That was eight years ago. Bitcoin is still the granddaddy of all blockchain-based networks, and most of the others deal with alternate payment coins of one type or another. Since Bitcoin is king, the others are collectively referred to as ‘Altcoins’.

But the blockchain can power so much more than coins and payments. And so—as you might expect—investors are paying lots of attention to blockchain startups or blockchain integration into existing services. Not just for payments, but for everything under the sun.

Think of Bitcoin as a product and the blockchain as a clever network architecture that enables Bitcoin and a great many future products and institutions to do more things—or to do these things better, cheaper, more robust and more blockchain-01secure than products and institutions built upon legacy architectures.

When blockchain developers talk about permissionless, peer-to-peer ledgers, or decentralized trust, or mining and “the halving event”, eyes glaze over. That’s not surprising. These things refer to advantages and minutiae in abstract ways, using a lexicon of the art. But—for many—they don’t sum up the benefits or provide a simple listing of products that can be improved, and how they will be better.

I am often asked “What can the Blockchain be used for—other than digital currency?” It may surprise some readers to learn that the blockchain is already redefining the way we do banking and accounting, voting, land deeds and property registration, health care proxies, genetic research, copyright & patents, ticket sales, and many proof-of-work platforms. All of these things existed in the past, but they are about to serve society better because of the blockchain. And this impromptu list barely scratches the surface.

I address the question of non-coin blockchain applications in other articles. But today, I will focus on a subtle but important tangent. I call it “A blockchain in name only”

Question: Can a blockchain be a blockchain if it is controlled by the issuing authority? That is, can we admire the purpose and utility, if it was released in a fashion that is not is open-source, fully distributed—and permissionless to all users and data originators?

A Wild Duck Answer (Unmask Charlatans):
Many of the blockchains gaining attention from users and investors are “blockchains” in name only. So, what makes a blockchain a blockchain?

Everyone knows that it entails distributed storage of a transaction ledger. But this fact alone could be handled by a geographically redundant, cloud storage service. The really beneficial magic relies on other traits. Each one applies to Bitcoin, which is the original blockchain implementation:

▪Fully distributed among all users.
▪ Any user can also be a node to the ledger
▪Permissionless to all users and data originators
▪Access from anywhere data is generated or analyzed

A blockchain designed and used within Santander Bank, the US Post Office, or even MasterCard might be a nifty tool to increase internal redundancy or immunity from hackers. These potential benefits over the legacy mechanism are barely worth mentioning. But if a blockchain pretender lacks the golden facets listed above, then it lacks the critical and noteworthy benefits that make it a hot topic at the dinner table and in the boardroom of VCs that understand what they are investing in.

Some venture financiers realize this, of course. But, I wonder how many Wall Street pundits stay laser-focused on what makes a blockchain special, and know how to ascertain which ventures have a leg up in their implementations.

Perhaps more interesting and insipid is that even for users and investors who are versed in this radical and significant new methodology—and even for me—there is a subtle bias to assume a need for some overseer; a nexus; a trusted party. permissioned-vs-permissionlessAfter all, doesn’t there have to be someone who authenticates a transaction, guarantees redemption, or at least someone who enforces a level playing field?

That bias comes from our tendency to revert to a comfort zone. We are comfortable with certain trusted institutions and we feel assured when they validate or guarantee a process that involves value or financial risk, especially when dealing with strangers. A reputable intermediary is one solution to the problem of trust. It’s natural to look for one.

So, back to the question. True or False?…

In a complex value exchange with strangers and at a distance, there must be someone or some institution who authenticates a transaction, guarantees redemption, or at least enforces the rules of engagement (a contract arbiter).

Absolutely False!

No one sits at the middle of a blockchain transaction, nor does any institution guarantee the value exchange. Instead, trust is conveyed by math and by the number of eyeballs. Each transaction is personal and validation is crowd-sourced. More importantly, with a dispersed, permissionless and popular blockchain, transactions are more provably accurate, more robust, and more immune from hacking or government interference.

What about the protections that are commonly associated with a bank-brokered transaction? (For example: right of rescission, right to return a product and get a refund, a shipping guaranty, etc). These can be built into a blockchain transaction. That’s what the Cryptocurrency Standards Association is working on right now. Their standards and practices are completely voluntary. Any missing protection that might be expected by one party or the other is easily revealed during the exchange set up.

For complex or high value transactions, some of the added protections involve a trusted authority. blockchain-02But not the transaction itself. (Ah-hah!). These outside authorities only become involved (and only tax the system), when there is a dispute.

Sure! The architecture must be continuously tested and verified—and Yes: Mechanisms facilitating updates and scalability need organizational protocol—perhaps even a hierarchy. Bitcoin is a great example of this. With ongoing growing pains, we are still figuring out how to manage disputes among the small percentage of users who seek to guide network evolution.

But, without a network that is fully distributed among its users as well as permissionless, open-source and readily accessible, a blockchain becomes a blockchain in name only. It bestows few benefits to its creator, none to its users—certainly none of the dramatic perks that have generated media buzz from the day Satoshi hit the headlines.


Ellery Davies is co-chair of The Cryptocurrency Standards Association,
host & MC for The Bitcoin Event and editor at A Wild Duck.

NC House Bill 2. Ignorance? No. Intolerance? Yes!

Indiana Governor Mike Pence must be breathing a bit easier right now. It was just a year ago that his zealous support for the Religious Freedom Restoration Act threatened to undermine every business sector in the state,

Of course, that was a year ago. Governor Pence has signed legislation that revises the law to prevent potential discrimination. Although the revised law doesn’t outlaw LGBT discrimination, the stench around Indiana lawmakers has abated because a year has passed since the glare of a media spotlight. Now, the spotlight is focusing on North Carolina, where House Bill 2 is threatening that state’s fiscal health.

For Indiana, the rebellion was led by sports teams, including national gatherings like NASCAR. With North Carolina, it is led by musicians and, of course, business. In just the past two weeks a slew of venues was cancelled or sidelined, including concerts by Bruce SpringsteenPearl JamMaroon 5 and Itzhak Perlman.

Business and enterprise has a slightly longer time horizon than concert bookings, but the handwriting is on the wall: PayPal withdrew plans for a new Charlotte operations center because it opposes the law; the center would have created more than 400 jobs for the city. Deutsche Bank froze plans to add 250 jobs.

How bad is the public backlash? The Charlotte Observer reports that House Bill 2 could cost the state 5 billion dollars. That billion with a ‘B’.

North Carolina House Bill 2

Yes. This is the bill that thumbs its nose at the Obama administration after the White House issued guidance on common sense gender policies in public restrooms, especially in public schools, where it threatened the withdrawal of federal funds.

I won’t pretend that the issue is black & white. After all, a frequently repeated argument asserts that this ruling (or clarification of Title 9, as the White House characterizes it) permits a pervert to enter a girl’s bathroom by dressing as a woman or claiming to be transgendered, and that such entry poses a threat to children. The argument sounds reasonable—at least, that is, until you think about it for 10 seconds.

To illustrate my own take on the “Bathroom Bill”, I will support the common sense rights of transgendered individuals in using facilities that match their gender (as opposed to their birth sex)—by countering the arguments espoused by this angry, bipolar transphobic who is yelling his opinions at a Target store. He may be more vocal on the issue, but his logic is identical to every argument for shutting down Title 9 protections.

Caleb is the WildDuck reader who referred me to this video. He  exclaimed “Look at this ignorant nut and how a shopper takes him on,” This is my response to Caleb and anyone who is sitting on the fence about LGBT self determination…

Although you and I both disagree with the shouter in this video, Caleb, the term “ignorant” is not my first choice to describe this guy. I think that he is either a nut case, or he is off medication. But let’s consider his key argument: He claims that men can dress as women and take pictures of children in a kid’s bathroom.

  • I have not seen a kid’s-only bathroom—not even at Target. And so, I think that he is referring to the women’s bathroom.
  • There has always been the potential for a man to dress as a women and slip into a women’s bathroom. If the guy looks passable as a girl (whether transgendered or not), this activity cannot be easily prevented by Target or by turning back the transgender/Title 9 interpretation. After all, no one checks identity or gender when a customer ducks into a bathroom.
  • A pervert can just as easily take pictures of little boys. Just as with homosexual clergy, the proclivity to ogle little boys may be more common then it is with girls.
  • If a child is young (i.e. if she is defenseless), a parent or bigger sibling is generally in the bathroom too. When parent is with child, there may be a stranger taking covert photos, but who the h*ll cares? He doesn’t pose a threat—and he is more likely to be identified and reported.                                 [continue below photo]


For all of these reasons, an inclusive and tolerant Title 9 interpretation is reasonable. The people who oppose tolerance are those who hate the idea that transgendered people exist (or worse: want them to be “cured”) . They oppose rights for personal and religious reasons. But, religion and exclusion have no place in government policy.

I admit that I paused to reflect on this issue—and a closely related issue regarding public school funding last week. But my reflection was brief. SNL-RFRA-sTransgendered individuals aren’t hurting anyone, nor damaging the fabric of society. Moreover, the opportunity to photograph kids in a bathroom is not increased by permitting individuals to use the restroom that matches their gender identity. That few people are likely to even know that their gender differs from their birth anatomy, makes this issue a red herring.

A Wild Duck Analysis

The fervent zeal to turn back transgender guidance is based on religion, hate, ignorance or intolerance. These traits have no place in government. It can be difficult to separate our fears from our better judgement, but these traits must never influence the law. Each member of society deserves civil rights. Congregate with whomever you wish, but our community laws should not attempt to repress benign behavior.

RelatedBad for Business:Laws that Bully LGBT

Ellery Davies is a recovering homophobic. Fortunately, recovery started
decades before Indiana and North Carolina stuck their heads in the sand.

Can Bitcoin be defeated by legislation?

The question breaks down into two parts:

  1. For what public benefit?     —and—
  2. No, it cannot be achieved in this way

Governments are in the business of regulating certain activities—hopefully in an effort to serve the public good. In the case of business methods and activities, their goal is to maintain an orderly marketplace; one that is fair, safe and conducive to economic growth.

But regulation that lacks a clear purpose or a reasonable detection and enforcement mechanism is folly. Such regulation risks making government seem arbitrary, punitive or ineffective.

QR Code_CRYPSA-001«—  This is money. It is not a promissory note, a metaphor, an analogy or an abstract representation of money in some account. It is the money itself. Unlike your national currency, it does not require an underlying asset or redemption guarantee.

Bitcoin is remarkably resistant to effective regulation because it is a fully distributed, peer-to-peer mechanism. There is no central set of books, no bank to subpoena, and no central committee to pressure (at least not anyone who can put the genie back into the bottle). In essence, there is no choke point or accountable administrative party.

Sure—it is possible to trace some transactions and legislate against ‘mixers’ and other anonymization methods—but there is no way to prevent a transaction before it occurs or to know the current distribution of assets. Bitcoin can exist as a printed QR code and it can be transmitted from a jail cell with a blinking flashlight. Sending bitcoin from Alice to Bob has no intermediary. Settlement requires only that one of the parties eventually has access to the Internet. But, there is no credit authority or central asset verification.              [continue below image]…


If you are thinking of legislating against the use of Bitcoin, you might as well pass laws to ban the mating of feral cats or forbid water from seeping into underground basements. These things are beyond the domain of human geopolitics. You can try to shape the environment (e.g. offer incentives to cats and water levels), but you cannot stop sex or seepage.

Fortunately, Bitcoin is not a threat to governments—not even to spending or taxation. A gross misunderstanding of economics and sociology has led some nations to be suspicious of Bitcoin, but this improper perception is abating. Governments are gradually recognizing that Bitcoin presents more of an opportunity than a threat.

I have written more extensively on this issue:

Ellery Davies is co-chair of The Cryptocurrency Standards Association, MC for The Bitcoin Event in NY and monetary systems board member for Lifeboat Foundation. This fall, he will teach Cryptocurrency and The Blockchain in Massachusetts.

Bitcoin Pundicy: Recent Wrap-Up

Students: The list at bottom is your homework handout. Choose three. Refute
Ellery’s position (total length about equal to the original article). Cite references.

AWildDuck is my primary soap box. Here, I have the luxury of pontificating on whatever screams for a pithy opinion with sarcastic spin. But, regular readers know that I was recently named most viewed Bitcoin writer at Quora…

Quora is not a typical Blog. Both questions and the numerous answers form the basis of a crowd-sourced popularity contest. Readers can direct questions to specific experts or armchair analysts. The reader voting algorithm leads to the emergence of some very knowledgeable answers, even among laypersons and ‘armchair’ experts.

During the past few weeks, Quora readers asked me a litany of queries about Bitcoin and the blockchain, and so I am sharing selected Q&A. Although a pundit, I resist an urge to be verbose or bombastic. My answers are not the shortest, but they are compact. Answers may contain metaphors, but they explain across a broad audience and with the fewest words.

Check out an answer to a question that you know the least about. (For example, do you know what the coming ‘halving event’ is about?). I would be interested in your opinion.

Ellery Davies is co-chair of Cryptocurrency Standards Association. He hosted
The Bitcoin Event and moderates the largest LinkedIN cryptocurrency group.

Blind Signaling and Response presentation posted

Online services mine personal user data to monetize processes. That’s the business model of “free” services. Even if mining is consensual, policies and promises cannot guaranty privacy. It succumbs to error, administrative malfeasance, hackers, malware and overreaching governments. Is there a technical solution? One that supports monetized data mining and manipulation, but only under predefined conditions, rather than by policies and promises?

Philip Raymond has spent the past 4 years searching for a privacy Holy Grail: The ability to facilitate data mining and manipulation in a way that protects user identity, restricts use to predefined purposes, and insulates results from other uses, even within the service that gathers and manipulates the data.

Prior to this week, there was scant public material on the Blind Signaling mechanism. A PowerPoint overview was accessible only by students at a few universities and the French mathematician who is donating resources to the project.

This week, Université de Montréal posted a live video presentation that steps through the BSR PowerPoint slides. It was filmed at a computer privacy workshop hosted by the university math and encryption departments. Master of Ceremonies, Gilles Brassard, is recognized as an inventor of quantum cryptography, along with his colleague, Charles Bennett. [Brief History of QC]

Blind Signaling and Response  by Philip Raymond…

I am often asked about the algorithm or technical trick that enables data to be decrypted or manipulated—only if the user intent is pure. That’s the whole point here, isn’t it! We claim that a system can be devised that restricts interpretation and use of personal data (and even identities of individual users who generate data), based on the intended use.

The cover pulls back near the end of the video. Unfortunately, I was rushed through key PowerPoint slides, because of poor timing, audience questions, and perhaps a lack of discipline. But, I will be happy to present my theories directly to your screen, if you are involved in custodial privacy of user data for any online service (Google, Yahoo, Bing, etc) or ISP, or upstream provider, or an Internet “fabric” service (for example, Akamai).

How it Works

The magic draws upon (and forms an offshoot of) Trusted Execution Technology [TXT], a means of attestation and authentication, which is closely related to security devices called Trusted Platform Modules. In this case, it is the purpose of execution that must be authenticated before data can be interpreted, correlated with users or manipulated.

Blind Signaling and Response is a combination of TXT with a multisig voting trust. If engineers implement a change to the processes through which data is manipulated (for example, within an ad-matching algorithm of Google Ad-Words), input data decryption keys will no longer work. When a programming change occurs, the process decryption keys must be regenerated by the voting trust, which is a panel of experts in different countries. They can be the same engineers who work for Google on the project, and of course they work within an employer NDA. But, they have an contractual and ethical imperative to the users. (In fact, they are elected by users). Additionally, their vote is—collectively—beyond the reach of any government. This results in some very interesting dynamics…

  1. The unique TXT-backed architecture gives the voting trust power to block process changes, if a proscribed fraction of members believes that user data is being disclosed or manipulated in conflict with prior user terms and expectations. Members of the voting trust are bound by non-disclosure, but their ethical imperative is to the end user.
  2. Blind Signaling and Response does not interfere with the massively successful Google business model. It continues to rake in revenue for serving up relevant screen real-estate to users, and whatever else Google does to match users with markets.
  3. Yet, BSR yields two important benefits:
  • a) It thwarts hackers, internal spies, carelessness, and completely undermines the process of government subpoenas, court orders and National Security Letters. After all, the data is meaningless even to in-house engineers. It is meaningful only when it is being used in the way the end users were promised.
  • b) Such a baked-in process methodology can be demonstrably proved. Doing so can dramatically improve user perception and trust in an online service, especially a large collection of “free” services that amasses personal data on interests, behavior and personal activities. When user trust is strengthened, users are not only more likely to use the services, they are less likely to thwart free services via VPN, mixers or other anonymizers.

Incidentally, the idea to merge a TXT mechanism with a human factor (a geographically distributed voting trust accountable to end users) was first suggested by Steven Sprague (just hours before my presentation in the above video…I had been working on a very different method to achieve blind signalling). In addition to being insightful and lightning quick to absorb, process and advise, Steven is a Trusted Platform expert, director of Wave Systems and CEO of  Rivetz. Steven and I were classmates at Cornell University, but had never met nor heard of each other until our recent affiliation as advisers to The Cryptocurrency Standards Association.

To learn more about Blind Signaling and Response—or to help with the project—use the contact link at the top of this page. Let me know if you watched the Montreal video.

Disclosure: The inventor/presenter publishes this Wild Duck blog under the pen name, “Ellery”.

Samsung Pay: Advantage over Apple & Google

When I got my new Samsung Galaxy S7 phone, I was lured into trying Samsung Pay. Samsung offered a $30 debit card for trying the wireless payment feature by the end of the month. I bought my phone on March 31 at about 9:30 PM. After driving back to my town, it was already 10:30 PM. Where can I find a place equipped with the latest point-of-sale equipment?

Samsung Pay lets users pay at a register without pulling plastic from a wallet. Just swipe up the app from the bottom of the phone (images of stored credit cards slide across the screen) and wave the phone near a credit card terminal. My authentication is my thumb. The fingerprint scanner built into the phone’s home button is considerably faster than the one on my daughter’s iPhone.

I had assumed that Samsung Pay was essentially identical to Apple Pay and Google Wallet. That is, I assumed that it used the NFC antenna to transmit a short range radio signal into the point-of-sale terminal—or perhaps a Bluetooth or WiFi signal. After all, the three technologies are all built into my new phone. Even my 3 year old Galaxy S4 has these three technologies.

But one thing puzzled me. At a local, all-night pizza shop, the POS system was at least 15 years old. It was an early Veriphone terminal with samsug_galaxy_s7no chip reader, no internet capabilities and an ancient RS-232 cable connecting it to the cash register. It seemed unlikely that NFC or Bluetooth was available for such a relic, even as an aftermaket upgrade. The shop owner agreed that I would have to reach for a real credit card.

Of course, this bothered me, because it was now less than 70 minutes to midnight. I had just purchased a shiny, new phone and the incentive for trying Samsung Pay was about to expire. How many retailers or restaurants are are open on a weekend at midnight? And how many would have a the new payment gear on premises?

Amazingly, when I placed my phone on the old card card reader at the pizza shop, both my phone and the cash register confirmed that I had just paid. I even received an instant message from American Express with a receipt for the pizza! (What?!!). I had seen the TV commercial starring Hannibal Buress even before I bought my new phone, but the main point—that Samsung Pay does not require new equipment nor even a tech savvy merchant—had apparently sailed over my head. 

I thought that this was a fluke. Perhaps someone had installed the new feature into the pizza shop equipment during a maintenance visit. But in the weeks that followed, I used Samsung Pay at even more antiquated cash registers. It even works with a cheap plastic reader plugged into the headphone jack of older phone (see photo). Even more puzzling, many of these merchants had no WiFi and my Bluetooth was turned off. How the heck did it work?!

There is no way that these sellers had NFC or other radio gizmos to accept payment. Yet, there it was! Each time I waived my phone at an ancient cash register, I received an instant receipt from the bank processor over the carrier network. As far as I could tell, it was the only network in the building. No one could explain how my phone had communicated with the old equipment—even with all radios disabled.

Tonight, I came across this article in a Samsung newsletter. It turns out that the ability to communicate with very old equipment really is magic!               [continue below photo]…

Samsung Pay even works with the free Square Reader

Samsung Pay even works with the free Square Reader

Last year, Samsung purchased LoopPay for about $250 million. That company figured out how to create a modulated magnetic field (they call it Magnetic Secure Transmission). A magnetic field emanates from the phone into the mag pickup head within the a card swipe slot (it’s actually a tape-recorder read head tucked into each card reader). The POS terminal thinks that a plastic credit card is being swiped through the payment slot! Amazing!!!

cassette_adapterIt reminds me of the cassette adapters that folks would stuff into car stereos before car makers added audio inputs, USB and Bluetooth. The audio quality is considerably better than using an FM transmitter, because, with the adapter, two polished magnetic tape heads were placed in direct contact with each other. Samsung Pay (formerly LoopPay) figured out how to couple the magnetic data at distance and in any orientation. Cool, guys!…I am really impressed.

Samsung Pay is compatible with almost every pay station in the universe. In theory, you could even use it at an ATM, although I suspect that the software would have to enable it for that purpose. It is the most clever use of backward compatibility and extending the investment of legacy infrastructure that I have encountered.

Post Mike Hearn: Can Bitcoin still Reign?

Beyond this first paragraph, I won’t mention Mike Hearn—despite invoking his name in the title. Enough has been written about the disillusioned core developer who, in January 2016, publicly declared Bitcoin a failed experiment, even as it continues to garnish adoption and increasing VC investment. Mr. Hearn points to a lack of leadership among the p2p community, dwindling incentives, and a seemingly intractable architecture disagreement among the miners who validate distributed transactions. Mr. Hearn is a terrific engineer, but I suspect that he is not a sociologist or market visionary.

As I began researching the potential for collapse or success, I collected my notes about Bitcoin’s future under the working title: “Market Traction: Clinching an emergent sector” . But this seems rather obtuse and sleep inducing. A good subtitle for this post would be “Random Thoughts About Bitcoin Growth Pains”.

As such, I won’t bother illustrating it with cute or pithy graphics. It’s just a justification and clarification of my continued confidence in a ‘failed experiment’.

A Bitcoin skeptic has asked me to justify my optimistic view of Bitcoin. After all, there is trouble in Dodge City: Dwindling financial incentives, a transaction volume that is straining the architecture and infighting amongst miners about forking and block size.

You might think that being first to a new market—or first with a radically new method—increases the chance of success. Alas, it isn’t so. Even if it were a maxim, Bitcoin is not the first digital currency.

Yet, Bitcoin is virtually assured of success. Not because it’s first, but because it is better/cheaper/faster, it has a two-sided market, and it can be extended by the features and benefits of its rivals.


Bitcoin isn’t the first digital currency. Numerous instruments have moved cash across the Internet and in the 150 year mail-order era that preceded the Internet. In addition to credit and debit cards, there was Western Union, DigiCash, E-Gold, Flooz, beenz, Cybercash, Cybermoola, PacketPass PayPal, and more. There are also institutional and B2B mechanisms for payment or settlement, like wire transfers, letters of credit, SWIFT, EFT and ACH (also known as ‘paperless checks’).

A lot has been said about Bitcoin and what sets it apart from everything that came before. Is Bitcoin truly revolutionary? Heck, yes! It has many unique qualities. It differs from antecedents in three important ways:

  • Pure, Capitalist Dynamics
    Bitcoin is not backed by a government, organization or the promise of redemption for fiat currency. Instead, value is derived from supply and demand. Since the supply is well understood and capped with mathematical certainty, its long term value will be closely tied to growth in recognition, circulation and adoption.
  • Decentralized & Permissionless
    Bitcoin trade and settlement has no nexus or central authority. Transactions are completely decentralized and peer-to-peer. In the past, a decentralized coin had to be made of something valuable or it had to be backed by a stable government and difficult to counterfeit. Bitcoin is a new breed of currency—a decentralized, permissionless, peer-to-peer currency built on the blockchain.
  • Not so Anonymous—but traded and stored with impunity
    Unlike cash, its use is not truly anonymous—at least not if you intend to ever convert it to cash or pay for something in the real world. But it is easier to hide then cash and so it can be stored and spent with impunity. That is, no government can force you to turn over your wallet without your cooperation. And the only way you can be prevented from spending or receiving Bitcoin is to be locked in solitary confinement with no visitors, no phone, no mail and no Internet. Since Bitcoin is just a string of numbers, a payment channel can be opened via carrier pigeon or by simply blinking a flashlight with Morse code.

Bitcoin is the first of a new breed of crypto currencies—decentralized, permissionless, peer-to-peer instruments built on the blockchain. That’s because Bitcoin is the original demonstration platform of the blockchain. The blockchain and the payment instrument were described together by the mysterious Satoshi Nakamoto in 1998.

Does creating the table and getting the first seat guaranty success? Of course not! Just ask Sony. The Betamax was beaten by VHS. And there were others before it, like the Sony U-Matic and Quasar Time Machine. But Bitcoin has two things under its wings that Betamax didn’t have…

  1. Bitcoin has achieved a 2-sided network. No one else is even close. With each week that (goes by, a 2 sided network shuts out competitors, unless they bring a whopping advantage. That’s why Adobe Acrobat (PDF viewer) has trumped all other portable doc formats.
  2. But what if something better comes along. Something clever, fast, more robust or with improved privacy. What then? No problemo. Bitcoin can freely add any improvement proposed or demonstrated by others. Why? Because cryptocurrencies are open source projects without licensing requirements. You think not?! If any altcoin were not open source, then no one would trust it, because no one knows who has the coins, how many were pre-mined, what is the monetary cap, and who controls code evolution.In summary, Bitcoin can evolve to add future improvements or solve its own problems. That’s what is happening right now, as it is forced to address its own growing pains.

Final Thought

One coin, Ethereum, may be an exception. It might achieve the same entrenched and ubiquitous status as Bitcoin. But Ethereum represents another major step in Blockchain evolution. It is not just a coin, it is a contract consensus and enforcement mechanism. As such, it is not just a currency. Bitcoin has a similar feature (called “Smart Contracts”), but Ethereum is like Smart Contract on steroids … and it has been crafted in a way that makes it easy for anyone to jump on board and create their own contracts. Like Bitcoin, Ethereum has a compelling backstory and a very young, visionary inventor.