Ryan X Charles is the founder of the decentralized content sharing platform DATT and a former cryptocurrency engineer at social network Reddit.
In this opinion piece, Charles discusses why he is building his platform on the bitcoin protocol even despite the emergence of new blockchain platforms such as Ethereum.
Since last summer when I announced Datt, an in-development social media platform and application powered by bitcoin, one of the top questions I’ve been asked is, “Why are you using bitcoin?”
Last year, this question often took a different form. I was asked “Why not use Stripe?” or “Why not make an altcoin?” Since the rally in Ethereum over the past few months, the question has morphed into “Why not use Ethereum?”
The answer is because Datt only needs Internet money right now, not advanced smart contracts, and switching to Ethereum would incur a large technical and economic cost which would ultimately fail to deliver a proportional return.
If we simply prioritize our feature set, we can and will add advanced smart contracts based on bitcoin when the time is right. Ethereum, at a protocol level, is arguably more advanced than bitcoin. Since it is Turing-complete, it has solved the limitation of the scripting language built into bitcoin.
However, the economy around Ethereum is much more limited than bitcoin, and therefore Ethereum is less useful for Datt.
Because Ethereum has a very different protocol than bitcoin, it isn’t easy for bitcoin companies to add support for Ethereum.
Roughly speaking, bitcoin companies have three options:
- Increase the technical complexity of their platform by adding Ethereum support to their bitcoin support
- Drop their assets in the bitcoin space but keep complexity limited by switching from bitcoin to Ethereum
- Solve the hard problems in bitcoin by designing and building complicated systems.
Some companies will choose option one, increasing technical complexity by supporting both Ethereum and bitcoin. This is a mistake.
Rather than shaping their own future, these companies will let their fate be decided by the whims of speculators and hype. I am bearish on companies that divide their effort between two conflicting visions of the future. With the exception of exchanges, they will fail.
Other companies will choose option two, dropping assets in the bitcoin space and supporting Ethereum instead. I think this is a valid option for some companies.
If a company never had strong assets in bitcoin, perhaps they can find a new niche in the Ethereum space. They will take a hit by pivoting, but they could still succeed over the long-term.
However, this path is not actually any easier than the bitcoin path. I predict these companies will ultimately be faced with the same problem they are facing now — lack of traction. They will still have to solve hard problems, but at a later date, and with a smaller market.
Option three is to solve the hard problems in bitcoin.
This is being tackled by companies like Blockstream, 21, OneName and OB1, the development team behind OpenBazaar. These companies see bitcoin as the largest and most secure foundation for the future of finance and information services.
When they encounter problems, they solve them by writing code rather than pivoting to a different platform.
This is the path that I am taking with Datt, with the help of my collaborators. For example, since the bitcoin block size is limited and has recently caused transaction fees to rise, we have started implementing a solution based on payment channels.
Pivoting to Ethereum wouldn’t eliminate problems for Datt – it would just create new and different problems, and delay our success.
The most useful, important and revolutionary application of blockchain technology is Internet money.
Bitcoin creator Satoshi Nakamoto had the right goal and made the right economic decisions when designing bitcoin, in particular limiting the supply of bitcoins to 21 million. The incentives the network and encourages global adoption of bitcoin over the long-term.
It will not be possible for Ethereum or other platforms to outcompete bitcoin at its core value proposition.
Datt, like our older cousins in the space, see an opportunity to service an enormous future market based on bitcoin, not by waiting for other people to solve the hard problems for us, but by solving them ourselves.
Note, I haven’t studied Ethereum in detail at a technical level, so I take its developers at their word that they have solved the Turing-completeness problem correctly. However, I suspect that there are many other less obvious problems around its ability to scale that will need to be solved, just as with bitcoin.
And since bitcoin has a larger economy and a longer head start on solving these problems, I am not convinced that Ethereum, at an ecosystem level, is more advanced than bitcoin or will be able to outpace it.
Question mark image via Shutterstock