It's starting to look like Altcoin 2.0 all over again, or perhaps better stated as Altchain 2.0. If you haven't been around long enough to remember Altcoin 1.0 we can take a quick stroll down memory lane.

Back in 2010 after the Blockchain had been in action for many months. Bitcoin was gaining the momentum to reach new heights of a whopping few pennies, and believe it or not you could still mine them on a crappy old desktop or good for nothing laptop. People took notice (obviously).

To sum it up easily some decided to enhance the network with an altchain or sidechain, others decided that they could all do better so instead of work on the bitcoin project or build useful technology to strengthen the network they built their own and up popped a bunch of altchains (alternate blockchain) most with its own token dubbed an altcoin. Namecoin was the first to fork the bitcoin software.

This is not a bad thing in all cases, some bitcoin enthusiast may disagree, but there are some useful altchains/altcoins out there such as Ethereum or the aforementioned Namecoin. However, a very large portion of these tokens were nothing more than a way to attempt a pump-and-dump. Generally with a "pre-mine" before the coin was ever even released.

Before you knew it, we had over 1000 of these things. Sometimes we wonder why virtual currency took so long to gain exposure, altcoins likely had a hand hand in that. When you are trying to get people to buy in to something called Batcoin (yes .. there was/is a Batcoin), it's hard to be taken seriously. 

Thus altcoin/altchain 1.0 as whole was not necessarily a good thing either and Altchain II has laid the groundwork to be even worse.

Privates, Permission, and Tokenless

Companies have pretty much diluted "blockchain" from a once unique term describing the technology underpinning bitcoin to just about anything at all if sales people think they can sell it. They've removed the fundamental purpose of blockchain technology with permissioned systems and private ledgers to the point its nothing much more than a workflow system that cannot be as secure as the blockchain itself because its based on the same flawed technology traditional systems are based on.

Some companies have gone even further have removed the token (what bitcoin is) out of their software designs making their distribution unrecognizable as a blockchain. This is not to say a blockchain cannot exist without a token, [blockchain] technically does not have to be a tokenized system, however, it must provide an immutable electronic trust of which no 3rd party is required beyond that of the transacting parties using only itself as that trust. Thus without an incentive to support the network, there's a massive security and privacy risk since the network will be weak and the only thing you are left with are paper contracts that don't work today and your right back to square one.

If anywhere a human is introduced into the process, there is a hole in the security. Humans cannot be trusted. This has been proven over and over again.

Here Comes Altchain 2.0

All of these new altchains (the VC backed "blockchain-technology" software) are going to start appearing everywhere, just as they did the first go around. This time the mistakes are going to be bigger and already have been, the implosions have the potential to be greater, and the entertainment value of watching this will be priceless. It will be like one of the TV Mini-series concoctions, you'll be mildly interested to learn the outcome of the story but will have to endure the wretched drawn-out saga to the point that by the time it's over you won't care anymore what happens. 

As we saw the first time out of 1000 there might be a handful of decent ideas and the same can likely be expected this time as well. I certainly do not wish this upon the industry and would rather see a positive outcome but unfortunately the most likely scenario is usually the one that happens. Even large companies you would expect [respectfulness] and positive things from have directly antagonized blockchain developers and misled clients due to sales pressure, greed, or just complete ignorance and that certainly will not help the situation.

Although the truth of the matter is that it's unlikely a word is going to be mentioned if things go south since nobody plans to send a press release about their private blockchain failing. 

That said, here's one of the problems and why none of the latest blockchain-bandwagon news is interesting and is all very unexciting. Everyone has been waiting for years for blockchain apps on bitcoin blockchain, recently Ethereum's chain, and a few others as well. That's certainly but slowly coming to fruition thanks to a few entities. However, what most companies seem to be doing is building .... more blockchains.

It's like releasing computer after computer while nobody releases software or releasing smart-phone after smart-phone without ever releasing any apps and that's what we really need. Applications for the technology and not just software necessarily. Use cases as well.

There are already some hero's in this space. Overstock's T0, 21's Bitcoin computer and marketplace, and the Ubitquity Title/Deed platform to name a few. The latter uses Colu which is also a great tool and application. These are just a few examples, there are many others and these companies are on the right track.

Then you have companies like R3 CEV reinventing the wheel and IBM who was so late to the game they just threw a hail Mary in an attempt to sell Cloud subscriptions and started throwing money at workshops and coaxing clients into using their cloud-chain.

Let's also not forget projects like Hyperledger (Linux foundation paired with "powers-that-be" from a bunch of companies) which is a disaster of the "clash of political ego's" just waiting to happen, consulting firms like Accenture trying to spin a reason for themselves to drain departmental budgets, and banks like Bank of America who filed for a pile of blockchain related patents with no clue of what the technology is going to be used for. R3 did this too but they have claimed that they have some earth-shattering new product that is building up to be the greatest invention of mankind. We'll have to be blown away if and when this ever actually happens but lets hope they didn't just steal ideas from other people.

Hyperledger means well but there's going to be a power struggle over there ... mark my words.

Apple and Microsoft  

Recently Microsoft got into the ring but its focus has been more on supporting other blockchain efforts and developing tools for use with blockchain, stuff we can actually use, rather than reinventing the wheel. Admittedly, I have never been a huge Microsoft fan but in this area they have done better then others and if they were able to get something the their Visual Studio IDE to support blockchain applications on networks such as the blockchain (bitcoin) and Ethereum they would hit the ball so far out of the park it might not ever land. (Note: there is a Solidity IDE plugin for VS, it just doesn't work well

Apple has been pretty much anti-blockchain everything from day one. Recently they allowed bitcoin based wallets back on the iOS but then started denying them again and then Circle for Message was announced. So who knows about them.

Start-Ups and Start-Downs

With the exception of some tool "expectations" from Microsoft the rest of the entities late to the party are going backwards. They're all going back to 2010/2011 when the Altcoin 1.0 show started rearing its ugly head and we all know how that ended up. Well, get ready for the next phase because its here.

This time, however, they are calling altchains other "block-chains" that IBM calls a "design-pattern made popular by bitcoin" as if they had anything to do with anything ever prior to its existence and want to act all annoyed that they didn't invent it. Humorous considering they didn't even care a year ago.

Many of these are "private" and "permissioned" so its likely you'll never really know what they do and certainly cannot be taken seriously enough to be considered useful for anything outside of private business transactions still governed by paper contracts to support them "just in case". Sort of makes the blockchain requirement unnecessary. Why bother using the technology if you're not going to use the technology or use bastardized versions of the technology that don't support the actual technology?

Startup "blockchain" companies that are building "blockchains" are following the backwards thinking and building more blockchains to join the hundreds of blockchains that are sitting around doing nothing with their blockchain friends and talking about older blockchains and other blockchains all while the actual blockchains do all the heavy lifting and get none of the credit.

This is what we call a start-down, meaning they start down the wrong path from the beginning and it never gets any better. The problem with all of this is that they are unnecessary. There's more than enough of these everywhere and it won't cost anyone a penny to get involved. If you don't like what a blockchain does as-is, then you can grab the code and modify it as you see fit and release your own version. It's been done 1000+ times with 1000+ more on the way. If you don't want to host your own "private" blockchain, there's plenty of them out there for use. 

It's foolish to have a private blockchain anyways unless it's an internal system without a great security need. If you're going to just do intra-company office furniture approvals and procurement, then sure by all means go for it. Then again its no more secure than Oracle or SQL Server with layers of Fusion or SAP on top, so why bother? Just use the stuff you have in place now. 

If its sensitive information, then the most secure environment on earth currently is bitcoins network. This is an indisputable fact. A distant probable second would be the Ethereum network weighing in around 6 terahash, 5.8 to be more precise. To put that into perspective, a single ant-miner S9 which is designed to mine on the bitcoin network delivers more than twice the power of the entire Ethereum network combined. Just one single S9 is capable of a hashrate of 14 terahash.

Bitcoins network is slightly more powerful at 2.2 million terahash at the time of this writing. There's noting on earth that powerful. If you were to combine all of the super-computers on the earth currently today, it wouldn't even come close to the calculation speed of the blockchain which surpassed 1 exahash earlier this year in January and on September 24th just a few days ago surpassed 2 exahash (aka 2.2 million terahash or 2.2 million trillion hash).

Hashrate equates to security. Security is the main issue with current designs and financial networks as they exist today.

2.2 MM TH is approximately 25.92 zettaFLOPS, although a hash and a floating point operation are two different things, its about as close as we can get in comparison to put it in not very plain English , but the technologists and computer geeks will understand it ... except maybe the Geek Squad ... or anyone working at the Apple store. 

For everyone else, it just means it's hella-damn fast.

Useful Stuff

What we need are these "great ideas" for blockchain that blockchain builders keep talking about but never build or say they build and never release because they're busy building blockchains that nobody wants or needs and are inferior to what is already out there and available now. Its gotten to the point of ridiculousness when just about every other day another blockchain test on some althchain built by a new start-down backed by who cares how many 8 thousand and 6 banks in the known Universe, self-reported that they managed to self-send a controlled environment transaction free of liability, risk, or any responsibility at all of that transactions successful execution. Seriously, who  gives a shit? We accomplished this almost a decade ago, it's not impressive.

If they just spent a tenth of the energy building something useful instead of something we already have the innovation would be mind blowing. 

To make it worse, the contraptions they are building are worse than whats out there because they are taking the blockchain parts out and putting in the traditional crap that got everyone in the current mess in the first place. Here's a thought, how about giving innovation a try instead of the continued uninventive path the course is set for at the moment? 

How about something as simple as a system that secures a purchase order in a multi-sig blockchain transaction so when I fill an order I'm not worried about getting stiffed? Now that would be useful, 8 million more blockchains will not be. That will just be as annoying as it was the last time we suffered an onslaught of them.

Unfortunately, here they come anyway. 

Report by dinbits
Image by staff

The opinions expressed by authors of articles linked, referenced, or published on do not necessarily express, nor are endorsed by, the opinions the of or its affiliates.

Post a Comment

Powered by Blogger.