Why Bitcoin and Blockchain Are Only in Their Infancy

Author: GTong

If Bitcoin is not just a fluke, what is so special about it?

Recently, a New York Times article titled “Bitcoin Enthusiasts Give Up” gave readers reason to worry about the future of Bitcoin. However, Bitcoin and blockchain still have a lot of room for development, far more potential than readers might speculate based on just one article.

Indeed, expanding the bitcoin market presents serious technical and regulatory challenges. The bitcoin network can handle far too few transactions today, and the number of staff dedicated to security and software development is too small.

In his farewell speech, Bitcoin core developer Mike Hearn raised a lot of concerns (especially in the Bitcoin space; Mike Hearn now works for blockchain consortium R3CEV). And the concerns Mike Hearn raised are nothing new to Bitcoin enthusiasts.

Yet these challenges should be seen as a reflection of Bitcoin’s enormous success so far, rather than a harbinger of its impending downfall. In just seven years, Bitcoin has grown from a fringe technology used by libertarians and drug dealers to a commodity valued at more than $5 billion, backed by more than $1 billion in venture capital.

Bitcoin and the underlying blockchain technology are the focus of research and development at nearly every major financial services company, MIT Media Lab and the UK government.

Last week, Digital Asset Holdings announced it had raised $52 million in funding from some of Wall Street’s biggest names and unveiled blockchain-powered software as a new facility for the Australian Stock Exchange.

All of the problems Hearn discusses are arising as more people and institutions want to use Bitcoin; they are more like growing pains than death knells.

Sustainable Ecosystem

Despite the current challenges, we still believe that Bitcoin and blockchain will have the same potential as we did a year ago, when we decided to establish the Bits+Blocks voLAB.

Once you’ve seen the power of peer-to-peer digital currencies and interoperable payment networks, it’s hard to ignore them. Bitcoin has expanded our horizons and created new expectations for how we store and transfer value for all kinds of things.

While we believe strongly in Bitcoin, we also view it as just one part of an evolving ecosystem of distributed systems, shared ledgers, and cryptographic technologies that have a profound impact on the way we interact, transact, and communicate.

Bitcoin may not live up to our expectations, but it is certainly worth learning and paying attention to. We are still greatly inspired by blockchain technology to establish new forms of trust.

We’ve done new research investigating how these technologies might enable new digital identity systems, which makes us more convinced than ever that blockchain is a powerful tool that will enable new experiences.

Bitcoin has been declared dead several times before, and given the ups and downs that Bitcoin has experienced as a nascent technology, such comments should come as no surprise.

Just like the development of the Internet, from the original TCP/IP protocol to the network we use today, the revolutionary changes that Bitcoin and blockchain have undergone will most likely take at least 5 to 10 years to realize their potential.

JPM compiled from

Coindesk, Why Bitcoin and Blockchain