Circle CEO: Let’s talk about Bitcoin

【Abstract】 Bitcoin itself is the product of the same genes: a distributed, decentralized network based on open standard protocols and open source software, it is "permissionless" - anyone can join and use it. However, unlike those protocols that provide shared information and communication under the name of "blockchain", Bitcoin and blockchain networks share value in a trustless way.

About the Author:

Jeremy Allaire is the co-founder and CEO of Circle, a Bitcoin startup dedicated to providing secure, simple, and lower-cost financial services to Internet users. As an Internet entrepreneur, over the past two decades, the technology companies he has invested in and managed have produced products and services used by hundreds of millions of users and millions of companies.

Jeremy Allaire

Introduction:

     The Internet is a network that truly cannot be governed by anyone - no government control, no private company control. If anything, the Internet is only subject to open and free intellectual property rights, shaped by technical contributors from all over the world through standard organizations and open source software under the framework of open standard protocols. All these intellectual achievements are free, a gift and wealth for global citizens, and one of the foundations of economic globalization.

     Encoded in this gene is a very deep democratic and free spirit that protects individual expression, privacy, and freedom of creation. Despite the forces that try to restrict it, this spirit still breathes hard in the darkest and most restricted parts of the Internet.

Bitcoin itself is a product of the same genes: a distributed, decentralized network based on open standard protocols and open source software, it is "permissionless" - anyone can join and use it. However, unlike those protocols that provide shared information and communication under the name "blockchain", Bitcoin and blockchain networks share value in a trustless way.

Let’s talk about Bitcoin

     The recent trend is really a bit funny: intellectuals and "thought leaders", financial industry executives, technology experts, and even the media have all been chasing and falling in love with "blockchain" and "distributed ledgers", discussing innovative trends happening on the Internet regarding trust and value exchange.

     However, all those who talk about blockchain avoid talking about Bitcoin. In fact, only Bitcoin is truly relevant to this new trend. It and Bitcoin's blockchain are truly open platforms that spread trust and provide a highly secure public ledger for value exchange. Unfortunately, I have not met anyone who really shares how this technology works. This is just an evasion and intellectual laziness.

     Supporters of "permissioned blockchains" support "necessary controls" to establish a multilateral consensus-based settlement network, which can save incredible IT costs and reduce the cumbersome logistics of financial institutions. These are real use cases for blockchains. However, Bitcoin's blockchain is not suitable for all Qin Guang, just like HTTP cannot solve the problem of transmitting all forms of data and information on the Internet. But in most cases, people are saying, "They want all the benefits of Bitcoin, not Bitcoin itself."

     Imagine 20 years ago when the core protocols of the Internet (HTTP/HTML, SMTP, etc.) emerged, venture capital began to pour into software and Internet companies, and leading media, telecom and communications companies planned to build their own private, gated online services. Remember, the Internet was unreliable, insecure, and full of creeps and hackers. People wanted a safe, reliable, trustworthy and private network, and that was the future of the Internet. Across the world, state monopolies, government-run telecom companies and large commercial operators developed strategies to build closed, proprietary systems to provide consumers with "information superhighways".

     All of these companies are interested in the "technology behind the Internet" rather than the Internet itself. They are trying to create a "permissioned Internet" where they can control what is published online, who has permission to publish, and who has access to the information. They provide tools related to business information and charge for it, just as they always do.

     We all know what happened next. Innovators and engineers around the world were inspired by the open Internet, and instead of waiting, they started coding and building open protocols, connecting more and more people to the Internet. Permissionless innovation took root, and we changed the world.

     With so many lessons ahead of us, we should learn to be intellectually loyal and invest our efforts and energy in the right direction, rather than falling into the trap of existing power or institutional obstacles.

     We need to think about why we are here, working on this project? What is its importance, and is it related to technological progress and the capital we have invested?

This is a special time unprecedented in human history - over the past decade, we have connected nearly every person on the planet, fundamentally expanded access to knowledge and information, and goods and information flow in ways beyond our imagination.

     What has the open Internet contributed to this growth and prosperity? When we think about the prospects of Bitcoin and blockchain technology, what can we learn from it?

The DNA of the Internet

     The Internet uses a distributed and decentralized architecture. It was originally conceived by the US Department of Defense to provide a more secure network without a single point of failure. As the Internet became commercialized, it became a "permissionless" network. Anyone can connect a computer to the network without the need for permission to run a mail server or web server, just plug in the line.

     The Internet is a network that truly cannot be governed by anyone - no government control, no private company control. If anything, the Internet is only subject to open and free intellectual property rights, shaped by technical contributors from all over the world through standard organizations and open source software under the framework of open standard protocols. All these intellectual achievements are free, a gift and wealth for global citizens, and one of the foundations of economic globalization.

     Encoded in this gene is a very deep democratic and free spirit that protects individual expression, privacy, and freedom of creation. Despite the forces that try to restrict it, this spirit still breathes hard in the darkest and most restricted parts of the Internet.

Bitcoin itself is a product of the same genes: a distributed, decentralized network based on open standard protocols and open source software, which is "permissionless" - anyone can join and use the network. However, unlike protocols that provide for shared information and communication, Bitcoin and blockchain networks share value in a trustless way.

     In order to create a transaction settlement network without a centralized intermediary, there needs to be a way to ensure that the network is not abused, especially since the network is intended to confirm and record the only reliable ownership. According to the Bitcoin protocol, the newly created ledger can be added to the general ledger. Through the proof of work mechanism, the reward for confirming the ledger is the generated Bitcoin, which can be used to exchange value through the ledger. The clever model of proof of work demonstrates great applicability. So far, no one has come up with a better solution to build a global trust and transaction ledger.

    Do we really think that financial industry consortiums and alt-chain startups can challenge this open internet? Does anyone really think that these “permissioned blockchains” have the slightest chance of doing more than building buggy, insecure, closed backend IT systems for banks ?

     Of course, many people have realized that this $5 billion asset and secure ledger is very powerful, and there will be different levels of applications built on this infrastructure. Bitcoin has evolved with greater scalability and programmability, changing the past with new forms, such as how to protect and exchange different forms of property, how to operate and manage voting, and even existing economic rules, auditing and accounting methods.

     In essence, this wave will completely subvert industries that provide "trust and insurance", including government, law, accounting, insurance, not just finance, just like the early Internet.

But it is not a currency

     In a way, I think the narrative of “blockchain is good, Bitcoin is bad” is pretty accurate. Bitcoin itself is not a government-issued currency, and at its current stage of development, I don’t think it’s helpful to think of Bitcoin as a currency. I prefer to think of it as a new type of asset - a “digital asset” - that provides a valuable, secure transaction certificate on a global scale. It is the fuel that runs the blockchain network and can be used to protect and exchange almost any valuable asset, including fiat currency.

     So, what about a hybrid digital economy model? Most people don't want a new currency, they are happy with their dollars, euros, pounds, yuan and yen. They get paid and pay taxes in these currencies because they have purchasing power.

     On the other hand, however, people want the benefits that Bitcoin and blockchain bring - near-instant transfers, availability anywhere in the world with an internet connection, high security, and almost zero transaction fees.

     In this model, consumers and businesses can share value globally using any currency they deem important. Bitcoin and blockchain can provide open and secure ledgers and solutions. In each transaction, local currencies are transferred in and out through the intermediary of "digital certificates", and these transactions are ultimately settled on the Internet.

     Soon, we will be able to share value globally and expand to other forms of assets, including real estate, securities and insurance . Later, we will build intelligent rules and business logic to run this global security network in a trustworthy way, and everyone will participate in building new rules for global business and legal governance.

     Everyone can talk about "Bitcoin" without hesitation and recognize that it is the platform that drives this innovative technology, and it is no longer weird to talk about "Bitcoin blockchain" or "blockchain". However, before people actually build, use and expand this open platform, before it is as open as the Internet, there is really nothing to say about Bitcoin and blockchain.