Jihan Wu Smart Contracts

Jihan Wu (Future Of Bitcoin)Bitmain is the largest producer of bitcoin mining hardware in the world, and the company’s co-CEO Jihan Wu gave the keynote speech at The Future of Bitcoin Conference 2017 on Friday. During the talk, Wu outlined some of the key innovations he would like to see adopted by the Bitcoin network to help it grow over the coming years. Among the points made by Wu during his presentation were the need for smart contracts, economic incentives for full nodes and stakeholders, and the use of extension blocks to bring experimental features to Bitcoin.

Bitcoin is Missing Out on Smart Contracts and ICOs

Initial coin offerings (ICOs) built on top of Ethereum have been one of the biggest stories in cryptocurrencies over the past couple of months, and Wu would like to see this sort of innovation come to Bitcoin.

“I think today, Bitcoin has missed at least one very important innovations in the world, which is smart contracts,” said Wu. “When smart contracts were introduced, I recognized that it’s very important.”

Wu noted that he was an early investor in ASICMINER, which was a bitcoin mining hardware manufacturer that raised funds on unregulated, bitcoin-denominated stock exchange GLBSE. GLBSE was effectively a centralized version of the current ICO craze that operated in 2011 and 2012.

Wu recalled how GLBSE abruptly closed down at one point, which caused a number of issues for those who held assets on the trading platform.

“It was chaos because the capital table of the virtual company on the website became unknown,” said Wu. “No one could prove that he owns certain shares of a certain company.”

GLBSE was not the only attempt at an unregulated bitcoin stock exchange over the years, and other examples include BTC-TC, Bitfunder, and Havelock Investments. Due to the legal ramifications of running this sort of centralized stock exchange, Wu is of the belief that these sorts of assets should be issued on a blockchain, which is what has been seen on Ethereum via the ERC20 token standard.

“The ICO [market], I know, right now is quite crazy and there are a lot of scams,” said Wu. “But if you want to create a kind of decentralized economy, then you want to allow those entrepreneurs to raise money from the public without regulations.”

In reality, there are already a number of different ways to issue new tokens on top of the Bitcoin blockchain. For example, here is a tutorial for how to launch a new token via the Coinprism wallet. Having said that, a more complex scripting language is needed to create the sorts of decentralized applications that have been touted by Ethereum supporters.

In terms of smart contracts more generally, Wu noted that Bitmain first invested in RSK, which is an Ethereum-esque sidechain to Bitcoin, back in 2015.

“As a community, we have to admit that Bitcoin is a little bit late [to] this innovation,” said Wu.

Later in his talk, Wu mentioned that ICOs may be useful as a way to fund Bitcoin protocol development in a transparent manner. Although RSK did not launch via an ICO, the startup intends to generate revenue through the use of a developer fee for transactions on their sidechain. While not mentioning Blockstream by name, Wu stated that those who work on the Bitcoin protocol should not conceal how they intend to make money from their open-source development endeavors.

Economic Incentives for Full Nodes

Wu also discussed the need for economic incentives for participants in the Bitcoin network other than miners.

“One very important competing blockchain just redistributed the miners reward to long-term coin holders and their full node operations,” said Wu. “That’s the kind of model where you incentivize everyone to store coins over the long term, make judgments about the technical improvements for the long term, and to contribute to the community.”

It’s unclear which competitor to Bitcoin Wu was discussing here, but he indicated that Ethereum has implemented these sorts of solutions, which means he may have been discussing their intended move from proof-of-work to proof-of-stake.

Wu added that many bitcoin users view the features offered by Ethereum as scams, but he thinks there could be some important innovation there. In his view, many ideas are not tried on Bitcoin at least in part due to the monoculture around protocol development.

Finding an economic incentive to run a full node has been a topic of discussion in the Bitcoin community for many years, but not solutions have gained widespread support at this time.

Extension Blocks

One last area of discussion covered during Wu’s talk was the concept of extension blocks. Extension blocks are an idea that have been around for years, and Wu indicated that they could be useful in safely adding new, innovative features to Bitcoin.

“It’s a special sidechain that requires all full nodes and mining nodes to verify the consensus rules in the extension block,” said Wu. “If something goes wrong, the largest risk is maybe the extension block goes wrong. But it’s voluntary, and it’s just someone who dared to take a risk to use the extension block.”

Wu mentioned smart contracts and Mimblewimble, which is a proposed method of bringing tremendous scale and privacy to Bitcoin, as two examples of features that could be brought to Bitcoin by way of extension blocks.

It should be noted that the original sidechains white paper included a section on the risks associated with extension blocks.

Wu concluded his speech with a call for more experimentation in the Bitcoin development process. “It’s quite easy to introduce bugs in Bitcoin protocol implementations,” he said. “Most of the software will fail, but we have to try to be successful.”

  • Steffen Søborg

    No it doesent, there is already Ethereum for that. But the problem is that Jihan cant mine it with his Shit256 miners. And soon he wont be able to mine bitcoin with them either.

    • earonesty

      Bitcoin colored coins are easy to do ICO’s with. Indeed, T0 will help any company do this legally in the U.S. People only use Ethereum because Vitalik is willing to stick his face on the ICO as an advisor.

      Bitcoin developers and industry leaders have no such plans to encourage unregulated “coin offerings”. Encouraging Ponzi schemes will not be good for ETH in the long run.

  • smd
  • John Beamer

    Bitcoin has had smart contracts for 4 years in BITHALO. Why does the news always ignore this? The software uses double deposit escrow to make unbreakable contracts. This has more real world use cases than Ethereum in my opinion.

  • Mattyoung

    Bitcoin is missing the savings and loan trading pit. It is quite obviously missing that, a margin system. What is also missing is the inability of so called bitcoin executives to notice that the tax dollar has the savings and loan tech for a good reason. How does Bitmain executives use their credit card? Are you telling me this guy never noticed hat credit cards some with savings and loan possibilities? Like when I go to my ATM and see ‘Money market funds’ as a choice, it is there for a reason. For the umpteenth time no savings and loan, no pricing and bitcoin is going no where.

    How an BofA run a savings and loan for bitcoin?
    Like buy a bunch of bitcoin and issue a BofA branded side chain coin called BoA Btc, then do a 100% backed S&L and bitcoin takes off, it then gets like 2% of the market. Or BofA could do nothing and hope that bitcoin executive never, in their life, figure out something as simple as money market funds. Or BofA could say, screw this, bitcoin executives are dumber than turnips, instead crate banker coin which is supported by banks, is central banking neutral, and comes with a savings and loan function.