This extended cryptocurrency bear market is seeing some really interesting comments and memes across social media. Things like “Bitcoin: If you didn’t love me at $6,000, you don’t deserve me at $50,000” (even though Bitcoin is under $4,000 currently) are prevalent. Or the other discussions will be comparing the price of Ripple to Bitcoin. The problem with all of these is that they are looking at blockchain entirely as an ecosystem of speculative investment that has nothing backing it. Sure, the argument comes up that nothing is backing most currencies these days, and while that is fundamentally true, I can still take cash money to virtually anywhere, and pay for something and receive it, quickly an easily, this is not true of cryptocurrencies.
It’s important to distinguish a couple different use cases for blockchain. The first is the classic use case that came with Bitcoin, which is digital money. There are the half dozen or so forks of Bitcoin which don’t really change the fundamental use case for Bitcoin. While there is scripting available for Bitcoin, it isn’t a smart contract like Ethereum. Then you have all the others like Litecoin, Zcash, Monero, etc., which are all Proof of Work (PoW) based digital currencies. The problem is that you really can’t conduct your life with them, so using them is usually a novelty or a way to skirt the law in various countries, Bitcoin Magazine is currently running a series on living using Bitcoin. Outside of that, people are just speculating on them and the price rises and falls based on that speculation, while there is very little activity with them as a method of engaging in commerce. I’ve been confronted many times by people deriding me as not being a “true believer”. It’s not a matter of belief, it’s a matter of knowing what tools are available and then using them correctly.
The other part of blockchain is using it as an enabling technology to facilitate projects. Blockchain at its core is essentially a secure, distributed and slow database. Ethereum has enabled the creation of smart contracts, which is distributed code that can be triggered by events to run. Most of the smart contract code seems to be in writing code for more tokens, there are thousands of them now. There aren’t a large number of useful running projects on blockchain using smart contracts yet. Many of the ones I’ve seen have had to move off of Ethereum because of the speed and costs associated, they were trying to put too much stuff on there and never tested it, to begin with. So what we have is not a matter of belief, but a matter of a knowledgable person or group of people, that evaluate the problem that is to be solved, and coming up with the best possible solution they can. Most of the times that you go through this process, you’ll find that blockchain is not, in fact, the right solution.
To the comparison I made earlier of Bitcoin and Ripple, this comes up all the time on social media as a topic to argue over. What people are arguing about is what is a better investment and not about the use case for the technology. Ripple and Bitcoin are entirely different technology that are addressing different things. Ripple is very good at moving large amounts of money quickly between financial institutions. The Ripple XRP token is not needed for this action, but they have been building products in that space to require the token, in my opinion, it is being retrofitted in for no reason other than the ICO craze that happened. Ripple also isn’t decentralized, where Bitcoin is decentralized, there isn’t any governing body or control over it, rather like Bittorrent.
Our blockchain ecosystem will benefit greatly from the elimination of snail oil salesmen in it and a focus on the utility of the technology and how it does or does not make sense. Blockchain is a technology to be implemented as a solution to a problem, not a religion to be believed in. If you aren’t sure if what you are doing is a good idea or haven’t done a technical evaluation of your project and the feasibility, then drop me a line and I’ll give it a once over.