Bitcoin Bits: 3 March, 2016

Some interesting articles on bitcoin and the blockchain that I came across this week:

The Dream of Buying a Coffee With Bitcoin Is Dying, If It’s Not Already Dead – by Jordan Pearson, for Motherboard

Somewhat apocalyptic, this article uses the current block size conflict to herald the end of bitcoin as a useful currency.

“There was a time when believers in bitcoin, the virtual currency backed by math instead of any government, thought that it might one day replace cash as a relatively anonymous way to pay for everything from groceries to your morning coffee.

Now, that dream might be smack dab in the midst of crashing down, a function of the currency’s code playing out. At stake is nothing less than two competing visions for the future of bitcoin itself.”

Further down, though, Jordan talks us through the two likely scenarios, neither of which spell the end of bitcoin.

“Essentially, there are two competing visions for the future of bitcoin. One… sees the currency scale up to worldwide usage by making blocks bigger and keeping fees and wait times low. Bitcoin would also be more decentralized, the thinking goes, with a plethora of people using the currency and running the software. The other wants to keep block sizes as they are, or only slightly larger, with those bitcoin uses currently being priced out of the system moving to other off-blockchain networks (“layer two”) that don’t put as much strain on the bitcoin network itself, like the Lightning Network. This could make for fewer people in bitcoin, since only actors willing to pay higher costs would use bitcoin proper.”

The choice seems to be one between massive acceptance, or functional practicality. Although the reality is that no-one really knows what will happen in either scenario 1 or scenario 2. What we do know is that technology evolves at a fair clip, the limits of today will not be the limits of tomorrow, and that the bitcoin community is full of very, very smart people who will find a way for bitcoin – or similar – to work.

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by Carli Jean for Unsplash
by Carli Jean for Unsplash

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Is bitcoin a safe haven against mainstream money mayhem? – by Camilla Swift, for The Spectator

For beginners, but told with style.

“If the euro is the nerd no one wants to be seen with, bitcoin is the coolest kid in the class.”

With, however, the usual errors. One, assuming that bitcoin users could/would attack the system:

“There’s always a risk of cyberattack too, especially given that so many bitcoin users tend to be high-level techies.”

The fact that so many “high-level techies” support the system must surely indicate that it’s pretty secure? And, just what would said techies have to gain from the plummeting price if bitcoin turns out to be hackable? The market for bitcoin shorts is not exactly liquid.

And:

“It’s also worth bearing in mind that this is the first digital currency to go large — and just look at the fate of other web firsts. Few of the earliest social media networks are still going today; everyone in the digital arena is always looking for the new, new thing.”

That’s like saying that Google was the first search engine to go large. We all know it wasn’t the first search engine, but it was the first to overcome the hurdles to scale. The same with bitcoin, it’s not the first digital currency, just the first to overcome the hurdles to scale.

Still, not the worst introduction that I’ve read. And coming from such conservative mainstream press as The Spectator, it’s a step towards a greater awareness of the possibilities.

“Bitcoin is an intriguing phenomenon, for sure, but its fate hangs in the balance. Would I risk putting my savings into such a mysterious thing? No, probably not. But a small punt? Well, in an uncertain world, it’s got to be worth a try.”

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Blockchain-based microgrid gives power to consumers in New York – by Aviva Rutkin, for New Scientist

This is very interesting. The idea of individual renewable energy generators that allow individuals to sell energy to their neighbours is not new. But I hadn’t heard of putting it on the blockchain before. The article talks about one street in Brooklyn in which residents are hooked up to an experimental solar grid, and can trade energy amongst themselves. Rather than going through an electricity broker, they do it directly with each other, using blockchain technology.

“Lawrence Orsini, co-founder of Transactive explains that the blockchain makes it easy for anyone to set up and enforce contracts, with the transaction following automatically.

“You don’t have the billing components around it, you don’t have the infrastructure losses or the accounting losses in the system,” he says. Down the line, the company plans to build an app which lets residents set personal preferences for the distribution of the energy they produce. One homeowner might decide to sell all their excess energy for maximum profit, for example, while another could choose to donate a portion to a low-income area.

Either way, the energy and the money goes to benefit the community, says Orsini, not the large centralised power company. “When you buy energy from the community, the money goes back to the community.””

If this works, we’re looking at impressive disruption of electricity supply. Powerful stuff.

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Governments Around the World Are Warming Up to Bitcoin and the Blockchain – by Prableen Bajpai, for Nasdaq

With Russia swinging from anti-bitcoin stance to a let’s-look-at-blockchain committee, with Australia testing a blockchain-based voting system, and with Japan considering treating bitcoin as a money equivalent, governments around the world are not only noticing that bitcoin exists (obviously), but are starting to take pro-active positions. There’s a lot of confusion and debate ahead, but such is the nature of progress.

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Have a crisp and original weekend!

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