Bitcoin … “A Model T for payments”

Bitcoin … “A Model T for Payments”

We must praise Bitcoin for surviving a decade, and showing that there was a new world possible. But, for many in the research community who want to build more trusted systems, its legacy and its association with bad things is something that doesn’t help with outlining how a new digital world can be build. It has long been seen as a role-model for Blockchain/DLT (Distributed Ledger Transactions) work, and but has now become an online investment method, in the same way that stocks and shares are traded.

Now the CTO of Ripple defined that Bitcoin is … “A Model T for payments”. The waste of energy of Bitcoin is a disgrace that no-one can avoid. It’s proof-of-work scheme might have seen acceptable a decade ago, but now its competition method used to secure the network just cannot be justified.

It is public, too! You might think that Bitcoin trading is secret, but it’s not! Everyone can see exactly who you trade with, and what the value is. If we are to build more trusted systems, we need to look at anonymising the blockchain layer, and build systems on top of this which start to build our existing digital infrastructures in a more trusted way.

It’s scaling too has proven to be difficult, and where it struggles to get anywhere near our existing payment methods.

Amir Hagafny [here] defines that there has actually been three generations of cryptocurrency:

• 1st Generation. These cryptocurrencies, such as Bitcoin, Litecoin, Monero and Bitcoin Cash, basically just store and transfer value, but have suffered from poor scaling and a weak architecture. The overheads involve relatively high transaction fees and transaction times.
• 2nd Generation. These cryptocurrencies, such as Ether, Neo, and Lisk, have platforms that support decentralised applications (dApps). This generation adds coding and smart contracts, and supports logical operations. A high-level code is then translated into byte code for the Blockchain.
• 3rd Generation. These cryptocurrencies aim to create properly distributed systems, and many use DAG (Direct Acyclic Graph). A traditional Blockchain just sequentially stores transactions and which can take some time to create a consensus through the building of blocks. With DAG, each of the transactions becomes a block, and it thus speeds up the consensus mechanisms.

Here is an overview of DAG which scales-up IoT:

And Ripple, which challenges SWIFT:

Conclusions

Thank you to Bitcoin, but you do not represent all that is good about building a new digital world.