TechCrunch Disrupt discusses Bitcoin and blockchain

While the block size debate is currently the most contentious issue in the Bitcoin community, the main topic of discussion in the larger fintech space is Bitcoin and blockchain. Some say that the technology behind the Bitcoin currency is the innovation of Satoshi Nakamoto, while others claim that the credit cannot be denied to others.

    At the 2015 TechCrunch Disrupt conference in London, a blockchain panel discussed whether a bitcoin token was needed to promote new developments in the fintech sector. Panelists included Austin Hill, a principal at Blockstream, Vitalik Buterin, the creator of Ethereum, and Steve Waterhouse, a partner at bitcoin investment firm Pantera Capital.

Austin Hill Explains the Problems with Non-Decentralized Digital Cash

     The debate over Bitcoin and blockchain is only a few years old, but Austin Hill was still able to put the conversation into a more historical context. As one of the main driving forces behind cypherpunk technology in the 90s, Hill is quite familiar with the problems associated with any form of centralization of digital cash networks. As smart contract popularizer Nick Szabo has explained in the past, trusted third parties are security vulnerabilities. During the blockchain panel discussion, Hill discussed the problems facing digital cash and other centralized electronic cash:

“If you look at the history of these technologies, one thing that’s really important to understand is that there was almost 20 or 30 years of research into cryptography that led to Bitcoin. I was involved in a company that was doing this in the early 90s. We spent millions trying to build electronic cash and all the systems that preceded it, companies tried to build digital cash in the late 90s, and they all failed because of the core concept of a central, trusted party. You have a single issuing authority, and when that database or that authority collapses, then all of a sudden all of the tokens that they had certified go away with it.”

     Hill also added: “Bitcoin is put first because it says we can have a completely decentralized network.”

     While Hill is clear about Bitcoin’s usefulness, he also noted that “there are some practical situations where Bitcoin’s decentralized nature is not appropriate.”

     One of the situations where decentralization is not needed at all is if you are issuing dollars or other assets on the blockchain. At the end of the day, the assets backing the tokens on the Bitcoin blockchain will still be held centrally. That being said, there are still a lot of supporters of issuing assets on the blockchain.

Vitalik Buterin discusses the complexity of Bitcoin and blockchain

     For Vitalik Buterin, the problem with Bitcoin and blockchain comes down to the specific goals that someone is using the technology to achieve. Buteri uses Bitcoin’s base currency unit as an example of a situation where you would need more decentralization:

“On the question of Bitcoin and blockchain, it’s very complex because there are so many different types of technologies. For example, one way you can think about it is: what types of applications do you care about? Do you care about currency? You know, in terms of the corruption of the Federal Reserve System, you want to replace the Federal Reserve System with an algorithm, which is 21 million devices.”

     Buterin also pointed out that the debate between Bitcoin and blockchain is better stated as a debate about blockchain technology and cryptocurrencies as a whole. He explained:

“It’s more appropriate to say blockchain and cryptocurrency because there are a lot of blockchains that rely on cryptocurrencies other than Bitcoin.”

Steve Waterhouse of US investment firm Pantera: Banks will reopen with protocols

     Steve Waterhouse looks at the Bitcoin and blockchain debate from an investor’s perspective. First, he explains: “We’ve tended to look at it as a technology lately, and I think it’s important to take a longer-term view.”

     Waterhouse then compared blockchain to the early days of the web, noting that in a few cases the technology may merge with some of the more common practices around it:

“I think if you look at the history of the web, it wasn’t very good for streaming video in its early days, but now we can do that very easily. I think if you look forward and think about the true potential of the technology and where it might converge, there’s a good chance we’ll see a range of public open source codebases, hardware, and protocols, but the question is: will blockchain win out in the end?”

     Although Pantera Capital is more interested in end-user use cases than the protocols behind them, Waterhouse also made his point, saying that blockchain will ultimately win out in the long run:

“I think things will eventually be compatible with Bitcoin and the Bitcoin blockchain. I think banks will end up using more open source protocols, and the convenience and ease of use of developing their own protocols.”

     While many people have expressed their opinions on blockchain technology over the past few years, it is important to remember that this is a brand new space. The reality is that no one foresees where this technology is headed, but its development over the next few decades has strong appeal. At the very least, there is a general vision for a blockchain-based system with the level of decentralization provided by Bitcoin.