Bitcoin – where does it go next?

Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts by David Gerard

I did a fair bit of reading about BitCoin in the past (after my interest had been piqued by the Coursera course on the topic), and have spent some time following the various newsgroups and issues, but have been troubled about whether Bitcoin stands at chance of succeeding in the real world.

This book is really good. It takes a massively anti-Bitcoin and associated technologies stance, and puts forward really good arguments about why Bitcoin is a massive fad.  As usual the truth is probably somewhere in the middle, but the author’s arguments about the troubles of scaling Bitcoin really make it seem useless – it can handle 7 transactions a second compared to Visa’s 50000, and many vendors gave up with it because of lack of interest, never mind the fact that it takes so long to verify a transaction that it is an impractical method of buying things for many types of transaction.

The author also gives some examples of where smart contracts have turned out to be anything but smart. He points out that legal contracts all suffer from interpretation and the regular need for arbitration, and so any kind of contract whose meaning is defined by a segment of code is never going to work at the edges where the contract depends on inputs from the real world.

There is also a good set of arguments as to why private blockchains fail to hit the mark. The current Blockchain burns as much power of Ireland, with much of the proof of work being used to randomise the miner who controls the transaction. Once you move to a private blockchain, you regain the centralisation which was one of the main selling points of blockchains, so you might just as well go back to a database instead… indeed, lots of people do not want their transactions listed in detail on a public medium so any kind of global leger is unlikely to gain traction.

In summary, a thought provoking, short read. Like many things, the technology is clever and it is really a question as to whether there is a place for it in the real world.