The initial wave of Bitcoin interest came from people who wanted to spend it. That, after all, was what Bitcoin was designed for. The title of Satoshi Nakamoto’s 2008 white paper was “Bitcoin: A Peer-to-Peer Electronic Cash System.” So Satoshi’s goal from day one was for Bitcoin to be a medium of exchange.
Fast forward ten years and Bitcoin is now commonly viewed as a “store of value,” rather than a medium of exchange. Bitcoin = digital gold is the mantra of crypto enthusiasts. But while Bitcoin is no longer viewed as electronic cash, two of the top five cryptocurrencies in CoinMarketCap are staking a claim to be exactly that: Bitcoin Cash and Litecoin. The question is, when can we buy a cup of coffee with either one?
Interest in blockchain and cryptocurrency continues to surge, which makes comparisons to the mid-to-late 1990s all the more relevant. That was a period when we were all trying to figure out how to use the Web – or “surf” it, using the lingo of that time.
We’re at a similar point with blockchain. I call it the “Geocities era,” because the user interfaces are ugly and not very user friendly. Digital wallets are the best example. Right now it’s difficult to store and transfer your cryptocurrencies, because you have to learn how to safely use private keys, what recovery seeds are (that list of 12–24 randomized words you’re asked to write down and hide somewhere), when and how to back up your wallet, what the heck MyEtherWallet is and why it’s needed when you transfer Ether, and so on. In short: it takes a while to learn how to use crypto wallets.
Over the weekend I had a rare experience: one my tweets went viral. It was an off-the-cuff and slightly pompous tweet about the role of white papers in the cryptocurrency ecosystem:
I’d tweeted that in response to a blockchain bro at South By Southwest, who had opined: “Read the white papers. Everyone and their mom is just pumped up about the wrong thing. It’s not my personal passion to educate people’s aunts who don’t understand math.”
That quote riled me up because the type of mathematics common in ICO white papers is beyond the grasp of anyone who isn’t a mathematician or a skilled blockchain programmer. For example, in my review of Filecoin I highlighted the complex mathematical formulas in their white paper. I would challenge anyone – let alone a SXSW bro – to explain to me what those formulas mean.
Loom Network, a startup from the TechStars incubator, has just launched a new development platform for DApps (distributed apps). When the company reached out to me, it described the platform as “new tech that allows developers to easily build highly scalable blockchain applications, with a focus on games and social — think World of Warcraft or Twitter on the blockchain.”
My ears pricked up when I heard “Twitter on the blockchain,” since that’s the example I’ve been using to explain why we need decentralized apps. What’s also intriguing about Loom Network is that it may encourage the development of apps that aren’t just exchanges or wallets. Put another way: if the blockchain ecosystem is to ever reach the level of app development that Web 2.0 (the Web as platform) attained, it needs development platforms that enable apps with real world utility to be built.
Being an Ethereum killer is a trendy thing in the blockchain world currently. What is an Ethereum killer? It’s a public blockchain that aims to be the primary platform for decentralized apps (DApps). While I’d like to say there’s room for more than one blockchain platform for decentralized apps, the reality is it probably is a zero sum game. Just as there is only one Web, there will likely emerge a big winner for public blockchains that run apps. Right now, Ethereum has the first mover advantage and a large, passionate developer community to boot. But many people think Ethereum is vulnerable on several fronts; such as scalability, governance and security.
We’ve already looked into two challengers for the DApps platform crown: NEO (“the Chinese Ethereum”) and Cardano (“the Japanese Ethereum”). Like those two pretenders to the throne, EOS currently sits within the CoinMarketCap top 10. Unlike the other two, EOS isn’t attached to a particular country. Its nickname so far has been “Ethereum on steroids,” due to the letters in its name and its performance claims. Whether EOS deserves that nickname yet is another question…
Part of the reason I started Blocksplain this year was to experiment with new ways of earning revenue from blogging. Perhaps cryptocurrencies will finally make micropayments a reality, I thought, or maybe the token business model will enable content creators to get a slice of platform revenues at long last.
Indeed there are blockchain experiments happening with both micropayments (SatoshiPay, BlockStream’s Lightning Charge) and token sharing (Steemit, Po.et). But now I’ve found a blockchain startup that does both: Brave. Even better, it’s using the good old Web browser as its flagship product.
Cardano (ADA) is one of several Ethereum challengers currently occupying the top ten of CoinMarketCap. While all blockchain projects are ambitious, Cardano is especially so. It not only wants to displace Ethereum as the primary blockchain developer platform, it wants to do so via a very long, complicated product roadmap that will be rigorously peer reviewed by academics.
The problem is, Cardano will take years to build. Ethereum already has a functioning public and decentralized blockchain with full smart contract programmability. Cardano isn’t decentralized yet (current nodes are controlled centrally) and smart contract functionality is unlikely to be released this year. So how realistic is it that Cardano will eventually usurp Ethereum?
In part 3 of our ongoing series about blockchain infrastructure trends, we’ll focus on storage. In particular, how one ICO aims to be the blockchain equivalent of Amazon’s giant cloud storage platform, S3.
Let’s firstly put this in context. A major part of the appeal of blockchain is that it will enable decentralized apps. The example I always gravitate to is a blockchain version of Twitter, which I described in a recent column. I chose Twitter to pick on because it has a history of flexing its centralized muscles and shoving aside third party developers. If Twitter had been a decentralized app from the start, those spurned developers would simply have forked Twitter and continued to build the open platform they – and we users – wanted.
It’s a lovely dream, but there’s at least one key problem with it. A decentralized Twitter would require somewhere to store the hundreds of millions of tweets that are produced every day (currently around 500 million tweets per day are sent on Twitter). While a blockchain such as Ethereum can be used to store metadata, it’s infeasible to store the actual content of tweets onto the blockchain. What’s needed is a decentralized storage solution.
When I first wrote about Status in mid-2017, it had just completed a $100 million ICO. At the time I described it as “a kind of next-generation Facebook Messenger or WhatsApp.” But in reality, there was no way to tell for sure since there was no actual product.
Since the ICO, Status has obviously spent time refining its marketing message. The project is now described as “a hybrid browser and messenger.” Its core features are browsing, chatting and making payments on “the decentralized web.” Okay, so does it have a product now, so that we can see what this functionality looks and feels like? Yes and no…
I’m writing a series of posts about blockchain infrastructure, and in particular how it impacts on blockchain and crypto startups. In Part 1, I discussed blockchain size and the key differences between Bitcoin’s blockchain and Ethereum’s. I concluded that blockchain size doesn’t have a significant impact on startups; it’s only relevant to miners and others who want an archive of the entire blockchain.
However, the speed of transactions on the most popular public blockchains does has an impact on startups. Indeed, transaction speed is at the center of concerns about the scalability of blockchains like Bitcoin and Ethereum.