Bitcoin Bits: 25 March, 2016

A selection of interesting articles about the bitcoin world from the past week:

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9 Myths Surrounding Blockchain Smart Contracts – by Willian Mougayar, for CoinDesk

Finally, a useful de-mystifier of the smart contract hype, with a bit of history:

“Historically, the concept was first introduced by Nick Szabo in 1994. Smart contracts then had a long gestation period of inactivity and disinterest, because there was no platform that could enforce them, until the advent of blockchain technology in 2009. Now, smart contracts are entering their prime, especially since Ethereum has popularized them further by making their programming a basic tenet of their blockchain’s power.”

It’s an important subject, as many claim that smart contracts are among the most exciting potential applications of bitcoin. But, as with almost everything blockchain-related, there is a certain amount of hype, which sets users up for disappointment and gets in the way of really understanding the potential.

“Like any new buzzword, the more a term gets popular, the more it spreads around. The more it will get used, but also misused and abused. It will mean a lot of different things to different people.”

In this article, bitcoin author, entrepreneur and advisor William Mougayar sets out the most common smart contract myths, and explains the reality behind them, in easy to understand language (not that easy to find in the bitcoin world!).

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Wall Street is Blockchain’s Weak Link – by Lionel Laurent, for Bloomberg

Can the blockchain ever replace inefficient settlement and banking procedures?

“But there are potentially unbridgeable gaps to cross before theory becomes reality. How do you get clearing-houses, exchanges and brokers to agree to a new system that would sweep away the one that is currently generating their profits? Will regulators want to wipe the slate clean on a financial market structure that has been tested by crisis after crisis and (in theory) strengthened as a result? Banks themselves employ plenty of middle-men, whether mortgage brokers or sales traders; how would they survive in a world of direct transactions?”

The press is overflowing with reports of banks investigating the blockchain, and would-be consortiums running transaction tests. On the one hand, the sector does need to try out what it would feel like to work as a group – that is what the blockchain is really all about, enabling transactions without a central authority. And on the other hand, each bank understandably wants to find a competitive advantage with a new use case scenario and innovative features. It’s rumoured that Bank of America alone has almost 40 blockchain patents filed.

“For now, executives are content to pay for experiments in niche trading areas such as trade finance or allocating shares before initial public offerings. That’s far from throwing open their doors to a revolution, and — worse still — that could lead to 1,001 blockchains run by different institutions, struggling to gain traction.”

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Mediachain: Protect Digital Content With a Bitcoin-Based Metadata Protocol – by Joseph Young, for Bitcoin Magazine


The intersection between bitcoin and digital media is an area I’m particularly interested in, as I think they both shine a light on what we mean by “value” and “content”, and they both are extreme disruptors.

Although this article contains a lot of words that I don’t understand, I’m including this article in the roundup because there’s not a lot of information out there about the potential impact of bitcoin on the media (if you know of any good links, please send them to me!). The focus here is on the protection of copyright, a concept that seems dominated by centralization, a lack of transparency, and low enforceability.

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Bitcoin Startups Eye Ethereum As Platform’s Profile Grows – by Pete Rizzo for Coindesk

You might have noticed that there’s an increasing amount of talk about Ethereum recently. Understandably so, it’s a fascinating application (that may be the wrong term), that lends “programmability” to the blockchain. It’s not bitcoin – its currency is called Ether – but it’s similar, only with more flexibility. I don’t pretend to know enough to talk at length about it here (I’m still learning), but this article is a good intro.

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I hope that you all have a great Easter break! It’s a beautiful Spring weekend here in Madrid…

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