I've been sitting on this article for quite a while just waiting for the right time to submit it. I knew that time was going to come and here it is.

I knew this because it's been like watching a television rerun as the venture capital (VC) seedlings jumped on one bandwagon to another, scratching and clawing for new justifications of self-importance while feeding investors one snappy slogan to the next. 

First Bitcoin, now the Blockchain, and they still don't get it. Do they need a pop-up book?

They have now crowned themselves Kings (and Queens) of the universe stating that "It's All About The Blockchain" and that that's what they really meant all along when millions of dollars were handed to them on a silver platter to become the next great BitCo.

This happened right about the the time when VC money was flying out the in door full force and bitcoin plummeted back down to earth. As the sky started falling, the VC seedlings were faced with watching their funding glory potentially ripped right out from under them so naturally, they groped for a shred of anything to provide continued justification for existence and that's when they stumbled upon "It's All About The Blockchain" and discarded Bitcoin. They likely found this in an old forum post.

They have since gone on to call Bitcoin things like "Blockchain's least interesting App" (Microsoft's John Farmer)¹ and "a solution looking for a problem to solve" (Western Union's David Thompson)², among other things.

Thus, initially with desperation, the attention made a massive shift from digital currency to blockchain technology, and we now have self-proclaimed pioneers armed with millions of VC dollars gracing the cover of magazines as if they had anything to do with it at all.

"Bitcoin Bad, Blockchain Technology Good" they exclaim, as they chant down their office hallways with a new lease on funding life and a hop, skip, and a gleeful cheery jump.

I hate to pop the bubble of glee and if it all sounds too familiar it's because we've been here and done this already. Just on a smaller scale and without as many VC firms jumping in. What the Bandwagon doesn't realize, or at least one of the things they don't realize, is that this is actually a rerun. 

All of this talk of "blockchain technology", "sidechains", and "private blockchains" has all been done before. 

Where the hell do you think 1000 AltCoins came from?

When Reality Kicks In

Unfortunately, this will have to run it's course. Which will be humorous in some ways and sad in others, however, it is a necessary evolutionary process. This is because the only people that can tell any of them that they are wrong, or partially correct, is themselves.

At the cataclysmic peek of this cycle, right about the time there seems to be a glimmer of hope for any of these business plans, a bulb is going to flicker. A bell is going to ding as a spark ignites. It's going to be about as subtle as a nuclear bomb hitting a city of glass as the "Blockchain Bandwagon" ultimately "gets it"

They are finally going to realize that it's really not all about the Blockchain, and that there is no Blockchain without Bitcoin anymore than there is a Bitcoin with out the Blockchain.

Suddenly it is all going to make sense and they will fumble about trying to figure out how they are going to re-position themselves.

I had to dig up an article we published from 2014 mentioning that the bitcoin critics would soon realize the technology underneath the hood existeted and snap out of the fog they were then in, and now this current article is the next one in the cycle of what I should call the "Coffee Articles", as in wake up and smell it.

The Hamster Cage

This particular cycle we are in will continue its current phase for a minute since those attempting to prove bitcoin unnecessary are not going down without a fight. They either have hidden agendas or simply do not realize the importance of Bitcoin in the Blockchain of things. Just take a look at Paycoin, even that concoction is still gasping for oxygen and won't completely die.

Preston Byrne, COO Eris Industries
Case in point, here is what Preston Byrne, Eris Industries COO, had to say³: 

"There needs to be public blockchains and private blockchains" and "private blockchains need to co-exist with public blockchains". 

Preston, there's only one true Blockchain (at least in terms of global acceptance), please refrain from standardizing it as an identifier. It's bad enough some people still call every soda a "coke".

O.M.G., you're one of those people aren't you?

This "private blockchain" working with the Blockchain in reference would actually be what is called a Sidechain. Although I admittedly have not read the entire context of the material from which this quote was taken, I am fairly sure I know exactly what he meant. 

He also states that:

"With a blockchain, the problem is you can't go back and erase something and block something out. The only way you can do that is making sure that the blockchain has a directory in it and if you refer to it at any time"

Um... yes. I'm going to let you in on a little tip, that is one of the key points of it all. It's called an audit trail and enterprise software globally does this as well. Take SAP for example, the largest ERP and financial system on earth. You can flag certain things for deletion, but they do not go away, they just do not appear to the user, are not reported, and do not calculate nor are they reflected in any way. The record is still there, however, for auditing purposes.

We really do not want things that have to do with our finances being "erased". It keeps little things like theft, fraud, embezzlement, money laundering and countless other shady activity from happening.

Eris Industries is of the belief that the Blockchain doesn't need bitcoin....

[this space intentionally left blank] ...

[let's add some crickets] ...

Well then it wouldn't be the Blockchain now would it? Go forth and build whatever you guys want to on the peer-to-peer front, but don't call it anything Blockchain related. Just call it what it is, a peer-to-peer developer tool, network, or whatever you folks are fiddling with.

The Blockchain was not the first peer-to-peer network and it certainly won't be the the last.

I'm not picking on Mr. Byrnes specifically, he just had the right quotes (or wrong) when I went to grab a couple. There are equally just as many silly statements made by other individuals as well.

I have heard that Eris Industries has done some neat things in the P2P space and I have nothing bad to say about them. Some of the comments made by their executive management, however, just goes to further solidify the point, the bandwagon has yet to really get it.

The Blockchain Blues

You cannot build a network or "permissioned ledger" and expect the same result as the Blockchain (permissionless ledger) any more than you can guarantee a #1 global smash hit song.

You can only propose it's existence and provide a framework that would to allow it to be. The rest of the world makes the decision.

Unless of course, you force feed a ledger to a group who has no choice (private permissioned ledger), such as a customer base as some banks have hinted. However, this already exists today and it's called a database. Banks already have these and they already use them.

The Blockchain is a global public network. No single entity built it and no single entity, individual, corporation, or government controls it. Its existence is due to the reward of bitcoin to the suppliers of its computational power that make it possible and the global adoption and agreement of its solutions, technology, and value of it's reward. That is why it works.

Without Bitcoin, there is no Blockchain. It would be like the internet without information or a vehicle without any fuel.

We don't get to add pictures like this often, so bear with us.

The internet has spring-boarded amazing technology including Bitcoin and the Blockchain, but without the information it provides this would likely have not happened. Look at it this way. Which is faster, a skateboard and a Ferrari? If you need to get from point to point as quickly as possible, which are you going to choose? The Ferrari right?

No, not necessarily.

If you don't have any fuel then a Ferrari is useless. You would need the skateboard to get to B. The Ferrari is certainly an incredible machine, however, without fuel a Ferrari is about as useful as a lead anvil, making the seemingly lesser method of transportation the superior one for the given situation.

The same principal applies here. Bitcoin is the fuel of the Blockchain.

Hidden Agenda

Many things can, have been, and will be said about a possibility of the Blockchain without Bitcoin, or an AltChain without a digital currency and technically it certainly is possible.

The problem with this theory is that it is improbable if the expectation is global adoption to the level of the Blockchain and Bitcoin.

It is improbable because the very reality that built the Blockchain, is the very reality what fuels these statements. Call it what you want to call it. Value. Money. Greed. Whatever. When something is given, something is expected in return. The entire universe works this way.

I didn't make these rules, this is just how shit works.

Remember Napster? It was not all that dissimilar to the Blockchain (note the Blockchain's technology is very different, but it is based on the same concept), music played the role of Bitcoin and the Napster software along with shared hard drives was similar to the Blockchain. It made up a peer-to-peer network and why did people lend drive space and decide to make this a possibility on earth? Free music. When something is given, something is expected in return.

How much do you want to bet that if there is a Blockchain without Bitcoin the same people promoting this idea stand to make a little money? Of course they do, and of course they all wish they had built the Blockchain. That way instead of Bitcoin, it would all be money going into their pockets instead of the global network of contributors who make it possible.

Trust me, some of these folks really do get it, they just don't want anyone else to get it. Fortunately, there's an App for that. It's called Bitcoin and the Blockchain.

Bitcoin is not a solution looking for a problem to solve, it prevents a problem from existing in the first place by making the Blockchain, and itself, possible.

Call it an anti-monopoly.

Where One Ends, Another Begins

Unfortunately, once this cycle concludes it will not be the end and we will watch this rerun a few more times as it all goes mainstream.

As this all moves forward, corporations will eventually have Blockchain developers on every IT team. IT support teams will install the latest [developer] IDE with a Blockchain SDK as standard issue for their development machines. The developers themselves, of course, will uninstall this once they manage to get "admin rights", and put something that actually works well in place to use.

Enterprise implementations will implement various tools to patch in the Blockchain for business from the enterprise software giants who come up with genius level marketing schemes to label their integration to the very technology they were slow to get up to speed on ... "innovative".

Companies like Accenture will be paid monumental amounts of money to assign 42 exploratory consultants together and plagiarize themselves up a shiny new explanatory document that could have otherwise been achieved with a sentence from someone who actually knew the answer.

Finally, once banks and big business pretty much bastardize any shred of originality and a standards team publishes a be-all-end-all format for all of the world to comply with, the average Joe will get involved.

The average Joe phase will likely be much more like the original episode than the current one, but A.J. will have more tools, more documentation, and the Google apparatus will deliver information about the inner-workings of the Blockchain in English rather than JSON.

For now, however, the current cycle is still in progress. Right now we're in the the "hey we can make AltCoins" phase of this cycle where you have companies like itBit making "BankChain" (not the SAP Bankchain, the itBit AltCoin that really isn't an AltCoin at all and sounds more like a database application) and others tinkering around with the Blockchain realizing you can do more than just send bitcoins. Go figure. We tried to tell you guys this years ago.

A few will manage to scrape by and we'll watch epic implosions, well executed exit strategy scams, pump and dumps, bad ideas, and read news headlines as all of these events unfold.

The Endgame

The bandwagon of folks who have jumped from Bitcoin to Blockchain will soon jump back to Bitcoin in their journey of ultimately landing right where it all started to begin with, Bitcoin and the Blockchain.

Once this happens and they realize the importance of Bitcoin's role in the grand scheme of things, just like they recently realized the importance of the Blockchain, some interesting things are going to happen.
  1. Bitcoin will most likely increase in value dramatically. 
  2. The potential of the Blockchain will result in some amazing applications based on the technology. 
Guess what happens next?
  1. They are going to see that they were right all along. That it really is about Bitcoin.
  2. They are going to see that they were right twice. That it really is about the Blockchain.
  3. 3rd time's a charm as they realize it's really all about Bitcoin and the Blockchain.  
This is because it is really about both. They cannot exist in the same capacity without each other. They are ultimately one.

I suppose there is something to be said for etymology and the "3rd time's a charm", meaning the third endeavor is the most likely to succeed. It seems how things unfold more often than not and will certainly be applicable with the "bandwagon".

How do I know all of this this? Is it because of some peculiar extraordinary psychic abilities? Are my forecasting skills beyond that of trained AI models and complex computer forecasting systems? Am I just that damn good? 

No, it's simply because I've seen this episode before.

Story by dinbits
Edited by dinbits staff
1. Microsoft Statement Reference (the econotimes)
2. Western Union Statement Reference (coindesk)
3. Eris Industries quotes: coindesk 
Image credits:
Banner image by dinbits staff
Bloomberg Markets Image: Bloomberg
Byrne Image: Eris Insustries
Ferarri Image: Ferarri vua Google
Napster Image: Google

Powered by Blogger.