Reflections of Generalisations
Interesting (to me at least). I had these thoughts on generalisations in 2016. I think they hold true to today (2021).Generalisations
During one DLT meeting I was kind of taken aback when someone said 'that's a generalisation'. They were right. And it made me think there are some things we can generalise about, things we've learnt and can reflect on, on our DLT journeys. I now try and split these out so people can sort trend from action.1. Business needs to meet technology.
For FinTech / DLT to gain traction, the following two disciplines need to come together / be bridged:
Business: The use case / commercial application that brings both transaction flow and bootstrap funding to the innovation; and
Technology: Network theory, databases are not new. What is lacking, in technology circles, is an appreciation of the context, demands and evolution of the existing market structures. We need to understand why and how 'the new model' meets or exceeds all the ingrained market practices of the existing Financial Services model.
2. BTC v DLT
Bitcoin and crypto currencies are in the realm of 'cyber libertarians'. Financial services / Banks and cyber libertarians are contradictory bedfellows. Distributed Ledger Technology, the clever stuff enabling bitcoin, can be stripped out and applied as technology in its own right. (Which also has the benefit of distancing itself from the bad press, rightly or wrongly, perceived around Bitcoin and crypto currencies in general).
3. The D in DLT is for Distributed
This means your community and your supply chain: farm gate to dinner plate, issuer to investor, well head to to forecourt bowser. You name it: the context is yours. We will have a new, nuanced, vocabulary including eco-system and community. All the members of this community may not have identical commercial interests but they will be aligned. Distribution also highlights the importance of governance.
4. The L in DLT is for Ledger
Ledger is a noun. Not a verb! The ledger is something. A data set. It does not do anything. You will still require processes and applications (and possibly smart contracts) to do something with your data.
5. The T in DLT is for Technology
How did you get to work today? Did the train run on a 4'8" gauge or a 3'6" gauge? Does it matter? (Well, yes, but to a daily commuter - no). So too it will be with DLT. Blockchain is just an enabler. Ultimately, the end user won't interact directly with your chain or even know they are interacting with a blockchain.
6. Not everything will be Distributed
DLT lends itself to distributed work flows. But some records are better centralised. Expect hybrid solutions where data ad energy efficient models emerge - some aspects decentralised, some aspects centralised.
7. Permissioned is the way to go
Proof of work is a pain. Capital markets want full anonymity in price discovery, but they still want to know they're dealing with 'approved' (regulated) persons. Your permission might be private or with a consortium but it won't be permissionless (which is the realm of our cyber libertarian cryptocurreny peers).
8. Adoption
To move from proof of concept to implementation your need certanty, finality and dispute resolution. This means Governance, Legal Framework and context within the prevailing Regulatory regime.
9. Don't boil the ocean
Blockchain can probably do everything...but don't attempt to be all things to all people. Focus is a prerequisite.
...and some BTC trivia:
How can we look at the hidden message in the first (Genesis) block?
https://bitcoin.stackexchange.com/questions/48669/how-can-we-look-at-the-hidden-message-in-the-first-block
2009, January 3: Genesis block established at 18:15:05 GMT
2010, May 22: laszlo first to buy pizza with Bitcoins agreeing upon paying 10,000 BTC for ~$25 worth of pizza courtesy of jercos
https://en.bitcoin.it/wiki/Category:History
Some reflections on BTC
I compiled these notes around 2016, when BTC was circa US$500.
I was thinking about investing, and so did a little research (TY Tim, you can see 3 of his publications here: https://www.linkedin.com/in/timswanson/) and came up with the following reasons why investing was not for me.
5 years later (2021), things have moved on a bit.
CSR is still an issue (in my mind). But now I think BTC power consumption will actually be a driver for change through innovation. Now the quest for power supply is driven by sustainability and the use of that energy in a loop, where one energy output is an input into another system.
There are also much better metrics available:
https://cbeci.org/
With some fun comparisons:
https://cbeci.org/cbeci/comparisons
The HashRate is also availbel at:
https://bitinfocharts.com/comparison/bitcoin-hashrate.html
What I don't like about Bitcoin (views my own).
1. It is not CSR (nor sustainable in my view).
Bitcoin, by some estimates consumes as much electricity as Ireland (yep, the country).
http://www.karlodwyer.com/publications/pdf/bitcoin_KJOD_2014.pdf
http://motherboard.vice.com/read/bitcoin-could-consume-as-much-electricity-as-denmark-by-2020
Many recent stories claiming that each bitcoin transaction uses an amount of power comparable to that required to power an American home for a week have derived their estimates from the website, Digiconomist. As of this writing, Digiconomist estimates that each bitcoin transaction requires 255 kilowatt-hours (KWh) of power, which could power a U.S. household for 8.61 days. The website concludes that bitcoin consumes “0.13%” of global electricity consumption, comparing the total power consumption of the bitcoin network to that of Ireland. https://news.bitcoin.com/analysts-debate-power-consumed-per-bitcoin-transaction/
W per GH/s*=(price∙BTC/day*)/(price per kWh ∙ 24hrday)
https://digiconomist.net/bitcoin-electricity-consumption
The PBOC Investigates the Power Usage of Bitcoin Mining
Put simply, the authorities will stop offering any preferential policies on power usage, land use and taxes. “The PBOC is working with local governments to curb electricity theft in small bitcoin farms. Large scalWue mining farms will not be affected.”
https://news.bitcoin.com/chinese-central-bank-hosts-a-closed-door-meeting-over-electricity-usage-of-bitcoin-miners/
Bitcoin Mining Now Consuming More Electricity Than 159 Countries Including Ireland & Most Countries In Africa
https://powercompare.co.uk/bitcoin/
2. Governance
Why can't I increase the block size?
https://en.bitcoin.it/wiki/Block_size_limit_controversy
[Againt] https://www.weusecoins.com/why-blocksize-limit-keeps-bitcoin-free-decentralized/
[For] https://www.youtube.com/watch?v=8JmvkyQyD8w
https://www.reddit.com/r/Bitcoin/comments/357usj/crash_landing_what_will_happen_when_blocks/
https://medium.com/@octskyward/the-resolution-of-the-bitcoin-experiment-dabb30201f7#.2rla8s0m8
3. Latency
Bitcoin writes one block...every 10 or so minutes.
https://blockchain.info/stats
Given that nodes are all over the world and to have a 99.9(recur) confidence level that there is no fork...theoretically you should wait for 5 blocks.
So, for a payment to be irrevocable, in the worst case, you could wait for an hour.
I can be a loooong way from my coffee shop in an hour...especially if I'm in an airport departure lounge!
...see also block size
4. Transaction Fees
BTC is a great idea....but it just won't work for buying a coffee. As the block reward continues to half, transaction fees will continue to rise (why else would I write your transaction?). Miners will cherry pick high transaction fee transactions. As for me willing to pay a few satoshis for a coffee....see also blocksize.
5. Block size (and centralization and scalability)
https://blockchain.info/charts/avg-block-size
https://en.bitcoin.it/wiki/Scalability_FAQ
....Both old estimates and new estimates place the theoretical maximum at 7 TPS with current Bitcoin consensus rules (including the 1MB block size limit)....
OK you say, we'll fix the block size (by increasing it). Great. But the consequence of that? More concentration of miners (who can handle bigger data sets) = less distributed ledger = more and more looking like a banking infrastructure (oops, careful what we wish for!)
6. Dispute resolution
Ummm. There isn't any. Even if you're robbed, ain't no one on the blockchain that can hear your plea...let alone do anything about it. In space no one can hear you.....
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