Blockchain technology was a key topic of conversation at last month’s Finance Disrupted event in New York, which was put on by The Economist. One of the panels at the event, Blockchain vs blockchain, explored the present state of the technology and whether or not one of the currently available options, such as Bitcoin or Ethereum, will be the one solution that brings massive efficiency gains to the world of finance over the next decade.
Circle CEO Jeremy Allaire’s comments were likely the most interesting from the perspective of the Bitcoin community because Circle makes use of the Bitcoin blockchain in their payments app. After briefly discussing the benefits of open networks, such as Bitcoin, over the walled gardens found in the traditional financial industry, Allaire went on to claim that the open standard (or standards) that the world decides to use for online value transfer in the future probably haven’t been created yet.
We’re Still in the Early Days
In general, the view at Circle appears to be that it’s very early days in the world of blockchain technology, so there’s no reason to become attached to one particular implementation.
“Our view is that we’re still in the really early stages of the technology and its development,” said Allaire. “It’s highly unlikely that any of us will be using Bitcoin in five or ten years. In the same way that — how many of us use NCSA Mosaic or Netscape Navigator?”
The idea of something better than Bitcoin coming along to replace the world’s first and most popular public blockchain is something that has been posited by many in the past. Bitcoin proponents tend to claim that this particular blockchain’s network effects and first mover advantage make it less likely that such a scenario would play out. Supporters of the Bitcoin blockchain are also optimistic about the peer-to-peer digital cash system’s ability to adopt new, useful features that may eventually be found on other blockchains.
According to Allaire, the lack of a standards body, similar to the web’s W3C, is an issue that will likely need to be resolved before a public blockchain can become more useful to a large number of people around the world.
“We need that equivalent model [to W3C] for value exchange, and that doesn’t exist yet,” said Allaire. “You’ve got a highly insular group of [Bitcoin] Core developers on Bitcoin. You have a benevolent dictator focused on Ethereum.”
“I don’t know what it will be called and when it will emerge, but it’s certainly not here today,” added Allaire.
Later in the panel discussion, Allaire pointed out that another reason it’s unclear what will be the best option as a public blockchain in the future is that there aren’t many active use cases for blockchains right now. “The actual use cases in the real world, beyond speculation, are extremely scarce — very, very scarce,” he noted.
R3 co-founder and COO Todd McDonald concurred with Allaire’s statements regarding the lack of clarity on what widely-used blockchain technology will look like in five to ten years. “We don’t feel that we’re ready, as Jeremy said, to anoint the winner,” he stated.
Ethereum’s Benevolent Dictator
After referring to Ethereum creator Vitalik Buterin as a benevolent dictator, Allaire went on to compare Buterin to Linus Torvalds of the Linux project. “That doesn’t feel like a good, open, global protocol process [or] standards body for value exchange; that’s still eluding us, I think,” noted Allaire.
McDonald agreed with Allaire on his assessment of Buterin as the effective dictator of Ethereum. He claimed Ethereum is supposed to be an unstoppable world computer, “unless Vitalik says to stop it and roll it back.”
Allaire also discussed the tradeoffs involved with Ethereum’s ambitions to become a general purpose compute engine, which, in his view, makes it a harder technical accomplishment. “It makes it harder to scale and secure,” said Allaire. “It’s way too early to know if that experiment is going to scale and maintain its security, but I think it’s a pretty important innovation.”
The Limitations of Privacy-Conscious Blockchains
One final, noteworthy thought from Allaire that came up during the panel discussion had to do with Zcash, which intends to be a more private and anonymous cryptocurrency (when compared to bitcoin). Allaire admitted that he is “pretty negative” on Zcash because he does not see it as a good fit for something that will be adopted by the mainstream economy.
“It’s useful if you’re a gambler, tax evader . . . all these things, but if you actually want to do something that increases utility value for consumers [and] businesses [and is] sort of focused on increasing the productivity and efficiency of how the economic system works, that’s a different design center than how to basically avoid taxes and government oversight,” claimed Allaire.
On the other hand, there are many who find Bitcoin’s usefulness in avoiding government regulations as the key attribute that gives the system value in the first place.
The current Bitcoin development community is extremely interested in adding more privacy-enhancing features to the digital cash system as soon as possible, so perhaps this would be another reason for Allaire to make his somewhat dismissive claims on the future of Bitcoin.