Why Blockchain is Not the Answer

There’s a persistent myth that blockchain tech is brand new and that if only given enough time, somebody will make something that’s useful for something other than money. This is what I call the “blockchain, not Bitcoin” syndrome and in this article, I’m going to dispel the myth that uses for blockchain are just around the corner, that they’re going to add decentralization to all the things, and that it’s some revolutionary new tech.

The concept is about as bankrupt as the company whose logo which this imitates. (credit: phneep)

Blockchain not Bitcoin is 5 years old already

Corporate obsession with blockchain started in 2014, shortly after Bitcoin got on their radar. Instead of paying attention to the revolutionary, innovative, decentralized and digitally-scarce money that is Bitcoin, they instead took a concepts from the software and called it “blockchain”.

Ignorance meets hype

The life that the word “blockchain” took on around 2015 was incredible. Tons of people, especially people that weren’t technical, often with only a vague sense of how Bitcoin worked, were saying things like “I believe in the technology, but I don’t believe in Bitcoin”. This was apparently the “consensus” response for business-types that wanted to seem like they were current on the technology.

Blockchain: the Panacea for All Ills

This pretense of knowledge led to books like The Blockchain Revolution, which promised fixes to pretty much every sector in the economy while giving just enough tantalizing technical concepts in vague enough terms that many executives felt the adolescent fear of missing out on the new technical trend of “blockchain technology”.

The Reality of Blockchain

This would work if only these developers could deliver on what the industry veterans wanted! How hard could it be to make a flawless, auditable, decentralized, encrypted database that execute terabytes of smart contracts quickly and efficiently using oracles that check each other using zero-knowledge proofs? Surely a few lines of code in Solidity could create a scalable, provably correct, maintainable system that would solve the biggest pain points of industry X, right? Well, no.

No, because no such explanations exist

The Utter Failure

The results of such shenanigans are sadly predictable. When you promise more than you can deliver with mediocre talent in a technology that few people understand, you’re not going to be able to deliver much. Most of these efforts have accomplished nothing. The few that created proof-of-concepts have not progressed to full-fledged products. The few products that have launched have very little traction (less than 2000 users per day is considered a complete failure for an app or website).

How can you be sure nothing will come out of blockchain technology other than Bitcoin?

It’s true, it only takes one counterexample to disprove my thesis that blockchain is really only useful for sound money. However, without bastardizing the word blockchain, the essence of what blockchains provide is decentralized, authoritative, expensive to alter data. This is not a surprise as these properties are exactly what you want for sound money like Bitcoin.

So many people are working on this! Something has to come out of it.

Lots of people working on something doesn’t mean desires magically turn into reality (see: alchemy, cold fusion, flying cars, etc).

Lots of money has gone into it! Someone is going to come up with something!

Certain engineering challenges are simply not a matter of funding, they are a matter of innovation. What’s worse, when a company is handcuffed by being required to use a particularly cumbersome technology like blockchain, there’s even less chance of anything coming out of it. This is the classic error of a solution looking for a problem. And no, more money won’t magically find you a profitable market problem for which a blockchain happens to be the most optimal solution.

Conclusion

“Blockchain, not Bitcoin” is not a new idea. The past five years have produced nothing with this so-called “blockchain” technology and we’re unlikely to see anything in the next five. The only thing that blockchain seems to be good at is promising to fix the biggest problems while delivering very little and consuming tremendous capital.

Bitcoin Educator, Developer and Entrepreneur. Book: https://amzn.to/2RSlnTb PGP Fingerprint: C1D7 97BE 7D10 5291 228C D70C FAA6 17E3 2679 E455