Bitcoin vs Blockchain - Can a private blockchain devalue cryptocurrencies?
Headlines
Cryptocurrency start-up Blockchain.info will partner with the United Nations to achieve their sustainability goals. Co-founder Nic Cary will join the UN's Blockchain Commission on Sustainable development that was launched in September last year.
Vladimir Putin has ordered that new cryptocurrency laws should be implemented by July 1 in Russia. The current two proposals are from the Ministry of Finance and the Central Bank of Russia. The former wants to created a regulated environment for ICO fund raisings while the latter is against the legalisation of cryptocurrencies all together.
The marshall islands are the latest country to plan a sovereign cryptocurrency. This follows Venezeula, Iran and Turkey last week.
Bitcoin vs Blockchain
Private blockchains continue to be on the rise. Credit Suisse and ING bank recently sent $30m across a 'blockchain powered platform'. HSBC Bank is close to launching live trades and transactions using blockchain technology. There are plenty of examples of other banks distancing themselves from "bitcoin" and instead focussing on "blockchain". There are even cryptocurrencies like Ripple that target this segment of the market, advertising their ability to exert control over the blockchain as a strength for financial institutions. What all of these are missing is the key innovation of decentralisation. A common criticism of bitcoin is as follows:
- Separate the blockchain technology from the cryptocurrency
- If the technology really works, Large heavily resourced companies can apply the technology to improve efficiency and reduce costs
- Eventually a very large financial services firm or tech company will introduce their own coin which would become an effective stable means of exchange
- This will debase the price of most cryptocurrencies.
My reply would be:
The value proposition of bitcoin is that it is decentralised. In order for a blockchain to be decentralised it needs it's own intrinsic currency like bitcoin. The way bitcoin is distributed to transaction processors (miners) ensures decentralisation of the blockchain; you no longer require a central entity to decide whether a transaction should be included or not. What critic's are describing is an improvement on the current system but it's still a centralised system. It might play out like that but the real innovation here is that bitcoin is decentralised (i.e. borderless, censorship resistant, neutral, open, no vetting of participants).
Blockchain on its own without decentralisation is just a new form of database. Early attempts at creating a digital currency like e-gold failed because of centralisation, a single company had complete control and so the government was able to shut it down. There's nothing to shut down with bitcoin. Instead the regulators can make it more difficult to transact between the new bitcoin economy and the old fiat economy. That bridge will be heavily regulated.
Here's a video from Andreas on the topic.
Market Snapshot
Bitcoin market dominance continues to climb, reaching over 40%. Segwit adoption hits all time highs of 30% resulting in fees across the network falling to as low as 1 sat/byte and clearing out the mempool completely
Market Snapshot
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