

This post was inspired by a chapter in Andreas Antonopoulosโ incredibly thought-provoking collection of talks, The Internet of Money. Iโd highly recommend reading it; he covers a variety of topics on bitcoin and the impact cryptocurrencies will have on society.
Thereโs quite a lot going on in the crypto space right now. ICOโs left and right. Talks of government-imposed regulations in South Korea. Allegations of a copied white paper, as well as copied code. And now China is cracking down on not only ICOs and bitcoin miners, but centralized exchanges as well.
But thatโs just the bad stuff covered in the media. It sends prices down, so yeah people might be more interested in that.
I think thereโs a lot more going on that doesnโt quite have a spotlight on it. Iโm talking about bullshit projects.
A lot of shit is being peddled to investors disguised as innovationโโโwhen itโs really business as usual. Itโs pretty easy to capitalize on this crypto craze right now. Take your business idea and write up a proposal, sprinkle the word blockchain here and there, and voila! If you position it correctly in the market and get enough people excited about it, youโll have a decent ICO in the near future.
Okay Iโm exaggerating, but with all these new blockchain projects being announced, itโs hard to believe that they are all truly innovating.
Letโs define blockchain real quick.
Itโs a distributed ledger that is immutable and extremely difficult to hack.
Let me expand on that a bit, just in case.
Itโs a record of transactions that doesnโt reside on just one central serverโโโa copy of it lives on every node of the network. And every time transactions are added to this record, itโs broadcasted to everyone, so everyone gets the updates. Once something is recorded, it cannot be taken backโโโitโs permanent. Everyone that accesses its contents can agree on its authenticity without the need to trust each other. Everyone verifies their own transactions, putting the trust on the network and its consensus algorithm.
But thereโs so much more to it!
Itโs open and borderless. Itโs above nation-states. And it doesnโt serve any one entity, organization, or institution. Thereโs no such thing as a good or bad actor, legal or illegal transactionsโโโonly valid transactions. Consensus rules are followed and smart contracts are executed regardless of the motive. And in order for it to protect all these characteristics, a blockchain is highly resilient and censorship-resistant, making it difficult for any colluding actors to do anything fraudulent or take the network down.
These are the characteristics that make blockchain technology truly disruptive.
However, the blockchain isnโt the only technology behind bitcoin. Bitcoin is the combination of four foundational technologies: blockchain, proof-of-work, cryptography, and peer-to-peer network. Without the help of these other technologies, blockchain is nothing more than a data structureโโโand a somewhat inefficient one at that. Itโs not really useful on its own.
But โblockchainโ and โdistributed ledger technologiesโ are becoming a standardized way of getting investors and the public excited about technology that they might not quite understand. In Andreaโs words:
Blockchain is bitcoin with a haircut and suit you parade in front of your board. Itโs the ability to deliver a sanitized, clean, comfortable version of bitcoin to people who are too terrified of truly disruptive technology.
Itโs a buzzword. And a sexy one at that. It seems like anyone can slap the word blockchain on their website, iced tea drink, or half-baked idea and bathe in crypto craze gains.
Even Kodak, the camera company who shot itself in the foot when they invented the worldโs first digital camera, wants some skin in the game. They were left in the dust on one digital trend, theyโll be damned if they miss another one. So they created their own cryptocurrency called KodakCoin. And guess what? Their stock saw a 92% boost. No surprise there.
But hey, maybe theyโre on to something.
The real problem is that some of these โblockchainโ projects arenโt really innovating. You can take their white paper and replace every instance of the word blockchain with databaseโโโand itโll still read the same. Itโs business as usual, disguised as innovation. Theyโre not building decentralized services as much as they are complicating their businessesโ core offering with technology that is, quite frankly, not ready.
In case you didnโt know, an application called Cryptokitties took the crypto world by storm mid-December, bringing the Ethereum network to a screeching halt. All due to a spike in transactions as people were buying and sellingโฆ digital cats. Thatโs just one application that went viral. If someone builds a theme park or arcade for these kittens using the same infrastructureโโโand not using a side chain or another scalable solutionโโโthings will go bad.
So, many of the projects touting their innovative solutions that โunleash the power of blockchain technologiesโ will be on a rather tight leash if they are counting on any kind of scalability in the near future.
That is, unless they use private blockchains (like Hyperledger)โโโbut then they are literally using a permissioned distributed ledger. In other words, a database.
Boring!
The point of Bitcoin and open blockchains is that they remove the need for a centralized authority. They provide trustless, neutral, borderless, and censorship-resistant platforms to exchange value on. If youโre taking a process and shifting the trust to new intermediariesโโโpermissioned blockchainsโโโyouโre not innovating.
Youโre just a new middleman. Youโre using this technology to make the same centralized processes more efficient to improve their bottom line.
Looking at you, Ripple.
The next time youโre reading a whitepaper or researching a project, use this checklist to decide whether what youโre looking at is actually innovating.
Everyone is stumbling around in the dark and reaching out for ways to utilize this technology. There are no margins here, no real path for realizing its true potential. But somewhere, someone will figure it out. And then weโll start seeing an explosion of creative and truly disruptive ideas.
Thanks for reading! Iโve been wanting to write about this space for a while now, and was getting real fed up with some of the b.s. floating around so I thought heyโโโlet me complain about it on Medium. Iโll be writing more developer-oriented posts in the near future.
Clap to 50, why donโt you?
Tipping is also welcome โ๏ธ๏ธ
ETH: 0x46AC3404a54B3Eaf8d3EA687a87EaC3BBfb1bd40
Create your free account to unlock your custom reading experience.