5 Things the Bitcoin and Blockchain Industry Needs to Stop Saying in 2017
In this CoinDesk 2016 in Review special feature, journalist Bailey Reutzel takes aim at some of the dominant talking points in the bitcoin and blockchain space today.
The bitcoin and blockchain industry continues to grow, but as new people begin to take notice, they’re often greeted with the same tired talking points.
As we head into 2017, some of those talking points should be left by the roadside entirely.
Below, let's review the blockchain tropes that are not only hypocritical, but also unimportant to the greater goal of the technology.
1. To the moon
Bitwala tweeted a question that was posed to Eric Martindale and his response at this year’s Money2020.
— Bitwala (@bitwala) October 24, 2016
Is there any reason to still give lip service to outrageous predictions about the bitcoin price? Predictions that last year and the year before were all wrong.
Bitcoin could hit $10,000 per bitcoin by 2018. Seriously, Tim Draper? I guess there’s still plenty of time for his prediction. Not so much for Pantera Capital’s 2014 prediction of $10,000 per coin that year.
Earlier this month, Saxo Bank offered an (albeit 'outrageous') prediction that bitcoin could hit $2,000 next year because of the supposed spending spree of President-elect Donald Trump after he takes office in the US, not to mention the currency restrictions of both China and India.
Not only is talking about the bitcoin price irrelevant to its goal as an alternative currency and payment method, but it also does nothing more than spark more speculative fervor.
According to Coinbase, about 70% of the transactions on its platform are speculative in nature, while only 30% are used for actual payments. So, hyping the price of bitcoin merely makes day traders richer. Nothing wrong with that, per se, although as I’ve always said, not really the altruistic goal.
So let’s stop saying things like this: “If you bought $1k in Facebook shares at IPO and $1k in bitcoin at the same time, your FB shares would be $3200 vs $141,000 for your bitcoin.”
Thanks, in hindsight, Roger Ver. We get it, you made millions.
2. Blockchains for EVERYTHING!!!
Blockchains will fundamentally upend most of today's business models: https://t.co/ykF3oYhYRS
— Fred Ehrsam (@FEhrsam) October 19, 2016
Fred Ehrsam, co-founder of Coinbase, tweeted this with a link to his column in The Wall Street Journal about how blockchain could totally rework corporate structure. In his mind (and many others), centralized institutions will fall to decentralized software protocols that allow people to do everything peer-to-peer.
While decentralized networks make sense in some cases, in others they are truly inefficient. They’re hard to manage, ask anyone that’s worked on projects of this nature, including Bitcoin Core developers who lament the process for getting consensus.
Many blockchain entrepreneurs speak in broad, abstract concepts (snake oil) that don’t dig into the technicals of how the technology will be able to solve issues faced by those industries. Many times, it’s because these entrepreneurs aren’t exactly clear how and why current industries, like healthcare, operate the way they do.
This empty-headed optimism also rubs off on the consumer value proposition as well, with many evangelists wondering why anyone would use paper money, checks, cards or anything other than cryptocurrency to transact.
The sentiment is at times pompous, lumping every consumer – from grandmothers to business owners to teenagers – into one category, even though these demographics have very different incentives and disincentives for transacting in particular ways.
3. No complaining
Andreas Antonopoulos, an industry pundit recently tweeted:
Profitable bitcoin companies that have never contributed anything to bitcoin dev or open source code have no basis to complain. #takers
— Andreas (@aantonop) December 8, 2016
That’s funny. What happened to “We are all Satoshi?” I guess that only applies if you agree with Antonopoulos. Sounds a bit tyrannical for someone that hates the state.
This is exaggerated throughout the sector. When someone disagrees, there’s not civil, educated discourse, there’s bullying. Opponents, or just those with a little different worldview, get verbally attacked by people hiding, many times, behind pseudonymous profiles.
The real problem, though, is that while bitcoin developers have created and maintained a protocol for businesses to use, businesses have made it easier to interact with that protocol. And in turn, have onboarded significant amounts of people.
This uptake brought even more developers and entrepreneurs, even more consumers and even more investors into the space.
As Tim Swanson, director of market research at R3CEV tweeted:
it's par 4 the course 2 see @jerallaire being villified & trolled by a community that has directly benefited from his entrepreneurial effort
— Tim Swanson (@ofnumbers) December 9, 2016
While these companies should give back to the developers of the protocol (just like every company that runs online should give back to the open-source community that keeps the Internet maintained), these businesses still get a voice in the industry.
4. Code is law
Less than three months before The DAO hack, Stephan Tual, founder and chief operating office of Slock.it, the company that developed the free and open-source software for The DAO, tweeted:
— Stephan Tual (@stephantual) March 21, 2016
This was after publishing an introductory blog post that stated, “A DAO is an organization that’s self-governing and not influenced by outside forces: its software operates on its own, with its by-laws immutably written on the blockchain, not controlled by its creators.”
And another one, only a couple of days before the attack, emphasis on the picture from Slock.it, retweeted by founder and chief technology officer, Christopher Jentzsch:
— Slock.it (@slockitproject) June 11, 2016
For as much testing and verification as The DAO code supposedly got, no one noticed the recursive calling vulnerability that allowed The DAO attacker to – under the conditions of the code – move more than $60m-worth of investor ether into his own account.
Decentralized software cannot code away social problems (a class that many problems are). The DAO, not only its fallout, gives the industry an example.
Using the number of tokens an individual holds as a basis for their reputation and, in turn their decision making power, only leaves those less socio-economically sound at a disadvantage, the same disadvantage they struggle with in today’s more traditional systems.
In parallel with this mantra is one of victim blaming, one that states that people should be free to invest in whatever they want, and if they lose because of a vulnerability in the code they should have more closely examined the code.
It’s the same nonsense that happens when someone’s phone gets hacked and their sexy pictures exposed on the Internet. They shouldn’t have taken them or they should have had better passwords.
It’s similar to the cryptocurrency community’s stance on initial coin offerings (ICOs), crowdfunding campaigns that sell native cryptocurrency tokens to people in an effort to fund the development of their platform.
But with the belief that those that participate should know every risk, especially in a technological area that’s new and opaque, this has lead many people to get screwed by pump-and-dump schemes and all-out scams.
While knowing the risks and how to parse the code is beneficial if not necessary, that doesn’t mean the industry should excuse the scammer from consequences.
A more appropriate slogan, which has gained some steam after Primavera De Filippi and Samer Hassan published an academic paper on the topic, is “law is code”. In the paper, the two suggest that law can be defined as code, but that code comes with limitations since it’s difficult to render ambiguous and flexible legal documents into a language for a machine.
5. Everything’s a blockchain
What is blockchain?
It’s a term that many years on, the industry is still trying to define. Typically, the definition depends on whether you put an “a” or “the” before the word.
Yet blockchain has also become interchangeable with distributed ledger technology and distributed ledger technology can really be damn near anything that looks to pass information between more than a couple of parties.
Pushing the obscurity forward, William Mougayar, author of "The Business Blockchain" and an adviser at several blockchain startup projects, tweeted out a link to a post he penned likening blockchain to the Google Docs’ feature for simultaneous editing:
— William Mougayar (@wmougayar) September 8, 2016
It’s not only confusing, but misleading, stripping bitcoin (which launched the first blockchain) of its delicate balance of economic incentives that make the protocol something more innovative than a traditional database.
According to James Wester, a research director responsible for global payments at IDC Financial Insights, the term “blockchain” has lost its mystique.
“It works still for outsiders, but inside the industry these blanket terms almost signal that the person you’re talking to doesn’t have a good grasp on what goes on underneath,” he said.
So do you or don't you know what you're talking about?
Have an opinion on blockchain in 2016? A prediction for the year ahead? Email [email protected] to learn how you can contribute to our series.
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.
Image via Shutterstock
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