Some of the more interesting articles about bitcoin and its family from the past week:
Craig Wright’s upcoming big reveal – by Izabella Kaminska, for the FT (paywall)
“The narrative being pitched is that on a pre-agreed date — ranging from April 7 to April 14 — Wright will publicly perform a cryptographic miracle which proves his identity once and for all. Those institutions being offered the inside scoop on his life story, meanwhile, are supposedly being asked by those claiming to be Wright’s legal representatives to abide by strict embargoes, timed to pre-empt the stage-managed revelations and the public press conference to follow.”
Sure, we all have a fascination with the mystery – who is Satoshi Nakamoto? But that stems from our desire for conclusive endings, which Hollywood and easy reading has pandered to since the beginning of time (I’m not complaining, I love a happy ending). But bitcoin is not about the story, it’s about the technology. And it doesn’t matter who Satoshi is. Personally, I really hope that we never find out. Because if we do, that person will probably disappoint (because he – or she – is human), and bitcoin does not deserve the distraction.
And, doesn’t this all sound just a bit stage-managed to you? Does this sound like the self-effacing, reclusive genius Satoshi seems to be judging from past behaviour (or lack thereof)? There, see? Even I get drawn into the speculation. But really, I don’t want to know.
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Bitcoin’s Rival: Ethereum’s Rapid Rise – by Martin Tillier, for Nasdaq
I confess that I’m still getting to grips with Ethereum, but it is exciting and intriguing to see the media turn its attention on the platform. Although, as usual, they go for the dramatic headline and miss the real potential (the text in this case is pretty good, though). Ethereum is not a rival to bitcoin. It is a healthy complement. Bitcoin was created as an alternative to money. Ethereum was created with other functionalities in mind, specifically programmable contracts and applications. Ethereum’s currency, Ether, exists to facilitate the transfer of information and the execution of clauses. Bitcoin exists to transfer value.
The differences are subtle, and at the same time vast. I’ll go into this more soon. But to get an idea of the potential, you could do worse than start with this article.
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Bitcoin transactions could consume as much energy as Denmark by the year 2020 – by Cory Doctorow, for Boing Boing
“The numbers in this study are very back-of-the-envelope and assume a worst case: widespread adoption of Bitcoin and not much improvement in Bitcoin mining activity, along with long replacement cycles for older, less efficient mining rigs. Even the best case scenario has Bitcoin consuming a shocking amount of electricity.”
So, we look for more efficient energy sources? More efficient chip design? I fully expect that very smart people have been working on that for a while.
What does bear thinking about is: how will cheaper electricity and more energy-efficient chips change the current bitcoin landscape? More decentralization? Or less?
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Bitcoin Technology’s Next Big Test: Trillion-Dollar Repo Market – by Katy Burne and Telis Demos
It turns out that the Depository Trust and Clearing Corp, and industry-owned institution that helps to settle trades, wants to test big settlements on the blockchain. This is exciting, in that it will open the path to a more efficient financial trading system, which should increase liquidity, transparency and allow for lower trading costs. But, what effect will those results have on the financial system? What impact would greater trading efficiency have on the stability of the system? Would money move faster, and is that a good thing? Would Wall Street profits increase, and is that a good thing? Or would this allow the decentralization of trading hubs? The creation of new types of securities? The rise of new regulations?
(Yet another title rant: bitcoin is not being tested! The blockchain is, and yes, the title implies that with the “bitcoin technology”, but what’s wrong with calling it the “blockchain test”?)
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Uncertainty In Bitcoin Doesn’t Extend To Startups – by Laura Shin, for Forbes
Laura points out that bitcoin companies are doing very well, thank you, in spite of the increasingly acrimonious block size debate. Although, the fact that a lot of money has poured into bitcoin startup investment does not mean that the businesses themselves are doing well. I imagine that some or even many of them are, at least I seriously hope so, but we aren’t working with publicly available data here, so a lot of it is hearsay.
But she does make the interesting observation that Coinbase is now a trusted brand, in a field designed to make trusted brands not necessary. Food for thought.
(Ok, another title rant: the uncertainty over the block size doesn’t affect startups at all, they’re not in the block size business. Yes, down the road when transactions are bottlenecked and people are losing faith in the original vision, I imagine that their trading volume will be affected. But the handful of businesses whose income depends on number of transactions will have found a solution in the Lightening Network or similar. They’re startups, they adapt quickly. So of course the uncertainty in bitcocin doesn’t extent to startups. Just as well, they usually have enough uncertainty to worry about.)
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Have a great weekend! It looks like here in Madrid we’re skipping spring altogether and heading straight into summer.