- What I Learned from 250 Whys — Let’s Plan for a Future Where We’re All As Stupid as We Are Today.
- Thoughts on Amazon Dash (Matt Webb) — In a way, we’re really seeing the future of marketing here. We’ve separated awareness (advertising) and distribution (stores) for so long, but it’s no longer the way. When you get a Buy Now button in a Tweet, you’re seeing ads and distribution merging, and the Button is the physical instantiation of this same trend. […] in the future every product will carry a buy button.
- A Collection of Links for Streaming Algorithms and Data Structures — is this not the most self-evident title ever?
- Lightning Networks (Rusty Russell) — I finally took a second swing at understanding the Lightning Network paper. The promise of this work is exceptional: instant, reliable transactions across the bitcoin network. But the implementation is complex, and the draft paper reads like a grab bag of ideas; but it truly rewards close reading! It doesn’t involve novel crypto, nor fancy bitcoin scripting tricks. There are several techniques that are used in the paper, so I plan to concentrate on one per post and wrap up at the end. Already posted part II.
The O'Reilly Radar Podcast: Vitalik Buterin on bitcoin, the blockchain, Ethereum, and the future of money.
In this Radar Podcast, I chat with Vitalik Buterin, founder of Ethereum and co-founder of Bitcoin Magazine. We met at our Bitcoin & the Blockchain summit in San Francisco to talk about the disruptive potential of the bitcoin and blockchain technologies. He also outlined some of the problems he’s trying to solve with Ethereum and weighed in on how the use cases of money are going to change over the next 10 to 20 years.
Buterin told me that his father initially introduced him to bitcoin in 2011, and he wasn’t immediately interested — in fact, he outright rejected it, thinking, “It looks like it has no intrinsic value, and it’s obviously not going to work.” As he kept hearing about, he decided to investigate more and came to the realization that ultimately led him to create the Ethereum platform:
I immediately recognized that the way bitcoin works is the way that money should work. It’s exactly the correct approach, where you have: here’s the address you’re supposed to send to, here’s how much you want to send, here’s the button to send it. It’s money made for the Internet, not like the credit card approach, where you just basically give everyone the details to take as much as they want from your bank account.
On a trip to Israel, Buterin encountered projects, such as Colored Coins and Mastercoin, using blockchain technology for things other than bitcoin currency. “They were trying to let people issue their own assets,” he said. “They were trying tack features on top, tack financial contracts on top.” The protocols, Buterin noted, were overly complicated and he realized there might be a better way: “You could make it much simpler just by replacing everything with a programming language, and then if you do that, then people can write as many features as they want in the programming language after the fact.”
The O'Reilly Radar Podcast: Balaji Srinivasan on the bigger picture of bitcoin, liquid markets, and the future of regulation.
The promise of bitcoin and blockchain extends well beyond its potential disruption as a currency. In this Radar Podcast episode, Balaji Srinivasan, a general partner at Andreessen Horowitz, explains how bitcoin is an enabling technology and why it’s like the Internet, in that “bitcoin will do for value transfer what the Internet did for communication — make it programmable.” I met up with Srinivasan at our recent O’Reilly Radar Summit: Bitcoin & the Blockchain, where he was speaking — you can see his talk, and all the others from the event, in the complete video compilation now available.
The bigger picture of bitcoin
More than just a digital currency, bitcoin can serve as an instigator for new markets. Srinivasan explained the potential for everything to become a liquid market:
“Bitcoin is a platform for programmable money, programmable interchange, or anything of value. That’s very general. People have probably heard at this point about how you can use a blockchain to trade — in theory — stocks, or houses, or other kinds of things, but programmable value transfer is even bigger than just trading things which we know already exist.
“One analogy I would give is in 1988, it was not possible to find information on anything instantly. Today, most of the time it is. From your iPhone or your Android phone, you can google pretty much anything. In the same way, I think what bitcoin is going to mean, is markets in everything. That is, everything will have a price on it — everything will be a liquid market. You’ll be able to buy and sell almost anything. Where today the fixed costs of setting up such a market is too high for anything other than things that are fairly valuable, tomorrow it’ll be possible for even images or things you would not even think of normally buying and selling.”
Understanding the value of the blockchain above and beyond bitcoin.
Editor’s note: Lorne Lantz is a program co-chair for our O’Reilly Radar Summit: Bitcoin & the Blockchain on January 27, 2015, in San Francisco. For more on the program and for registration information, visit the Bitcoin & the Blockchain event website.
I remember the first time I heard about bitcoin. It was June 2012, and I was invited to a bitcoin meetup. The whole time I was sitting there, I thought these were a bunch of computer geeks playing around with nerd money.
At the same time, I felt excited about the possibilities. If what the bitcoin believers were saying was true, it could become something very big. When I took a closer look, I realized why it could be so groundbreaking: decentralization.
Unlike other currencies and payment networks, bitcoin is not controlled by a bank, government, or financial institution. Instead, thousands of computers around the world verify transactions and manage a global decentralized ledger. This innovative technology is called the blockchain, and it provides a unique pathway that allows — for the first time — many computers that don’t trust each other to achieve consensus. In bitcoin’s case, they are achieving consensus on updates to the global ledger. Read more…
A look at the stumbling blocks to blockchain scalability and some high-level technical solutions.
Author note: Vitalik Buterin contributed to this article.
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“I have no worries that bitcoin can scale, and the simple reason for that is that I know that IPv4 can’t, and yet I use it every day.”
The issue of bitcoin scalability and the phrase “blockchain scalability” are often seen in technical discussions of the bitcoin protocol. Will the requirements of recording every bitcoin transaction in the blockchain compromise its security (because fewer users will keep a copy of the whole blockchain) or its ability to handle a great number of transactions (because new blocks on which transactions can be recorded are only produced at limited intervals)? In this article, we’ll explore several meanings of “blockchain scalability” and some high-level technical solutions to the issue.
The three main stumbling blocks to blockchain scalability are:
- The tendency toward centralization with a growing blockchain: the larger the blockchain grows, the larger the requirements become for storage, bandwidth, and computational power that must be spent by “full nodes” in the network, leading to a risk of much higher centralization if the blockchain becomes large enough that only a few nodes are able to process a block.
- The bitcoin-specific issue that the blockchain has a built-in hard limit of 1 megabyte per block (about 10 minutes), and removing this limit requires a “hard fork” (ie. backward-incompatible change) to the bitcoin protocol.
- The high processing fees currently paid for bitcoin transactions, and the potential for those fees to increase as the network grows. We won’t discuss this too much, but see here for more detail.
We’ll consider these first two issues in detail. Read more…
There is a burgeoning landscape around the blockchain’s decentralized consensus protocol technologies.
Although it may be early to baptize new buzz lingo like “Blockchain as a Service” (BaaS) or “Blockchain as a Platform” (BaaP), there is a burgeoning landscape of various implementations and activity in and around the blockchain’s decentralized consensus protocol technologies.
I’ve already covered the blockchain’s sweet spot as a development platform in “Understanding the blockchain,” so it is no surprise that its landscape will be made up of platforms, protocols, and (smart) programs.
Breaking-up the bitcoin-blockchain paradigm
In a perfect world, we would have a single blockchain and a single cryptocurrency. But that doesn’t seem to be in the cards, whether it is technically feasible or not. Although wide-scale adoption and a critical mass of users aren’t there yet, the market is signaling for a diversification of choices, some based on the bitcoin currency and its blockchain protocol, and others not. Read more…
We must be prepared for the blockchain’s promise to become a new development environment.
Editor’s note: this post originally published on the author’s website in three pieces: “The Blockchain is the New Database, Get Ready to Rewrite Everything,” “Blockchain Apps: Moving from the Jungle to the Zoo,” and “It’s Too Early to Judge Network Effects in Bitcoin and the Blockchain.” He has revised and adapted those pieces for this post.
There is no doubt that we are moving from a single cryptocurrency focus (bitcoin) to a variety of cryptocurrency-based applications built on top of the blockchain.
This article examines the impact of the blockchain on developers, the segmentation of blockchain applications, and the network effects factors affecting bitcoin and blockchains.
The blockchain is the new database — get ready to rewrite everything
The technology concept behind the blockchain is similar to that of a database, except that the way you interact with that database is different.
For developers, the blockchain concept represents a paradigm shift in how software engineers will write software applications in the future, and it is one of the key concepts that needs to be well understood. We need to really understand five key concepts, and how they interrelate to one another in the context of this new computing paradigm that is unravelling in front of us: the blockchain, decentralized consensus, trusted computing, smart contracts, and proof of work/stake. This computing paradigm is important because it is a catalyst for the creation of decentralized applications, a next-step evolution from distributed computing architectural constructs. Read more…
The O'Reilly Radar Podcast: Mike Belshe on making bitcoin secure and easy enough for the mainstream.
In this week’s O’Reilly Radar Podcast episode, I caught up with Mike Belshe, CTO and co-founder of BitGo, a company that has developed a multi-signature wallet that works with bitcoin. Belshe talks about about the security issues addressed by multi-signature wallets, how the technology works, and the challenges in bringing cryptocurrencies mainstream. We also talk about his journey into the bitcoin world, and he chimes in on what money will look like in the future. Belshe will address the topics of security and multi-signature technology at our upcoming Bitcoin & the Blockchain Radar Summit on January 27, 2015, in San Francisco — for more on the program and registration information, visit our Bitcoin & the Blockchain website.
Multi-signature technology is exactly what it sounds like: instead of authorizing bitcoin transactions with a single signature and a single key (the traditional method), it requires multiple signatures and/or multiple machines — and any combination thereof. The concept initially was developed as a solution for malware. Belshe explains:
“I’m fully convinced that the folks who have been writing various types of malware that steal fairly trivial identity information — logins and passwords that they sell super cheap — they are retooling their viruses, their scanners, their key loggers for bitcoin. We’ve seen evidence of that over the last 12 months, for sure. Without multi-signature, if you do a bitcoin transaction on a machine that’s got any of this bad stuff on it, you’re pretty much toast. Multi-signature was my hope to fix that. What we do is make one signature happen on the server machine, one signature happen on the client machine, your home machine. That way the attacker has to actually compromise two totally different systems in order to steal your bitcoin. That’s what multi-signature is about.”
The core principle in bitcoin is decentralization, and it has important implications for security.
Editor’s note: this is an excerpt from Chapter 10 of our recently released book Mastering Bitcoin, by Andreas Antonopoulos. You can read the full chapter here. Antonopoulos will be speaking at our upcoming event Bitcoin & the Blockchain, January 27, 2015, in San Francisco. Find out more about the event and reserve your spot here.Securing bitcoin is challenging because bitcoin is not an abstract reference to value, like a balance in a bank account. Bitcoin is very much like digital cash or gold. You’ve probably heard the expression “Possession is nine tenths of the law.” Well, in bitcoin, possession is ten tenths of the law. Possession of the keys to unlock the bitcoin, is equivalent to possession of cash or a chunk of precious metal. You can lose it, misplace it, have it stolen, or accidentally give the wrong amount to someone. In every one of those cases, end users would have no recourse, just as if they dropped cash on a public sidewalk.
However, bitcoin has capabilities that cash, gold, and bank accounts do not. A bitcoin wallet, containing your keys, can be backed up like any file. It can be stored in multiple copies, even printed on paper for hardcopy backup. You can’t “backup” cash, gold, or bank accounts. Bitcoin is different enough from anything that has come before that we need to think about bitcoin security in a novel way too.
The core principle in bitcoin is decentralization and it has important implications for security. A centralized model, such as a traditional bank or payment network, depends on access control and vetting to keep bad actors out of the system. By comparison, a decentralized system like bitcoin pushes the responsibility and control to the end users. Because security of the network is based on Proof-Of-Work, not access control, the network can be open and no encryption is required for bitcoin traffic. Read more…