Bitcoin startups (and the inevitable venture capital funding), have seen a trend away from Bitcoin and a new focus on the underlying technology, the blockchain. Are these indicators that spell the end of Bitcoin, or just a short-lived fad?
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The blockchain right now is used for storing transaction information from the blocks miners mine, creating a chain of blocks (hence the name). Transactions are secured based on how many “confirmations” they have, or how many blocks in the past it was broadcast to the network. Once six confirmations for a specific transaction has been reached, it is considered to be digitally set in stone.
The blockchain has always had the ability to append additional information into blocks, such as what BTC (blockchain technology corporation) is doing with their blockchain-based voting machine, as well as allowing users to build layers on top of the blockchain, in the form of colored coins and other digital assets.
The blockchain movement is not limited to Bitcoin startups either, with companies like NASDAQ, VISA, and American Express venturing into blockchain. R3, a coalition of over 20 of the biggest international banks, is a huge testament of how seriously the financial industry is taking blockchain technology. Unfortunately for Bitcoin, most of these institutions are interested only in the blockchain, so steps toward making their own “permissioned ledger” are occurring in an attempt to remove Bitcoin entirely out of the equation.
With less talk about Bitcoin as a currency, and more about the blockchain, some wonder if this is the beginning of the end of Bitcoin as a monetary vehicle.
I had the opportunity to ask all the speakers of the Inside Bitcoins San Diego Conference, scheduled to occur from December 14th – 16th this year, the following question:
“As more FinTech companies and institutions (not just banks) become more interested in blockchain technology, some fear that Bitcoin might be left behind. What do you believe lies in store for the future of Bitcoin? Is Bitcoin still vital with companies like NASDAQ and R3 more interested in distributed ledger technologies?”
“It’s not possible for bitcoin to be left behind. In fact, when banks refer to blockchain technology, they are actually referring to the bitcoin protocol not the immutable ledger of transactions. “Blockchain technology” is merely a boardroom-safe euphemism. The technology behind bitcoin will remain an efficient, cost-saving asset for NASDAQ and R3. If they’re not doing so already, I suspect payment networks such as SWIFT and NACHA will also explore the bitcoin protocol.”
“I believe Bitcoin still has great use, and will not get left behind. In fact, I think to discuss one without the other (Bitcoin and blockchain technology) is a bit disingenuous. This is akin to talking about a peanut butter and jelly sandwich where blockchain is the peanut butter and Bitcoin is the jelly. You do not need peanut butter with jelly, but both are enhanced when you put them together, and that’s the same as Bitcoin and the blockchain … In other words, to use the blockchain without Bitcoin seems like getting half the sandwich – the side with just peanut butter when there is a jar of jelly sitting on the counter. Somewhere, this analogy has gotten off track, but it still seems akin to the blockchain technology/Bitcoin predicament.”
Only time will tell if Bitcoin still thrives, or if permissioned ledgers take over in lieu of the blockchain. Thanks to all the great responses from the speakers!
What does the future hold? Will Bitcoin still remain front and center of the crypto scene? Let us know in the comments below!