"blockchain" entries

Regulation and decentralization: Defending the blockchain

Andreas Antonopoulos urges the Canadian Senate to resist the temptation to centralize bitcoin.

Editor’s note: our O’Reilly Radar Summit: Bitcoin & the Blockchain will take place on January 27, 2015, at Fort Mason in San Francisco. Andreas Antonopoulos, Vitalik Buterin, Naval Ravikant, and Bill Janeway are but a few of the confirmed speakers for the event. Learn more about the event and reserve your ticket here.

We recently announced a Radar summit on present and future applications of cryptocurrencies and blockchain technologies. In a webcast presentation one of our program chairs, Kieren James-Lubin, observed that we’re very much in the early days of these technologies. He also noted that the technologies are complex enough that most users will rely on service providers (like wallets) to securely store, transfer, and receive cryptocurrencies.

As some of these service providers reach a certain scale, they will start coming under the scrutiny of regulators. Certain tenets are likely to remain: currencies require continuous liquidity and large financial institutions need access to the lender of last resort.

There are also cultural norms that take time to change. Take the example of notaries, whose services seem amenable to being replaced by blockchain technologies. Such a wholesale change would entail adjusting rules and norms across localities, which means going up against the lobbying efforts of established incumbents.

One way to sway regulators and skeptics is to point out that the decentralized nature of the (bitcoin) blockchain can unlock innovation in financial services and other industries. Mastering Bitcoin author Andreas Antonopoulos did a masterful job highlighting this in his recent testimony before the Canadian Senate:

“Traditional models for financial payment networks and banking rely on centralized control in order to provide security. The architecture of a traditional financial network is built around a central authority, such as a clearinghouse. As a result, security and authority have to be vested in that central actor. The resulting security model looks like a series of concentric circles with very limited access to the center and increasing access as we move farther away from the center. However, even the most outermost circle cannot afford open access.

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Clearing up a few of bitcoin’s misconceptions

Bitcoin is more than just a currency. Here’s a look at what it is and what it isn’t.

Just what is bitcoin, anyway?

Conrad Barski and Chris Wilmer, authors of Bitcoin for the Befuddled, recently hosted a webcast discussing exactly what bitcoin is (and what it isn’t), how it’s used, how businesses can use it, and some of the disruptive opportunities that bitcoin offers entrepreneurs.

How traditional payment systems work vs how bitcoin works

They presented an overview that clears up some of the misconceptions about bitcoin. Read more…

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Blockchain and decentralization hold big implications for society

Chris Clark on the blockchain's potential to disrupt the financial industry, from contracts to mortgages to government taxation.

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Bitcoin has come a long way from initially being perceived as a pipe dream or fake money. In a recent interview, Chris Clark, a software developer, entrepreneur, physicist, and author of Bitcoin Internals, recalled a story of one of the first bitcoin transactions: someone was congratulated on their “free pizza” after paying in the neighborhood of 10,000 bitcoins for two pizzas. “Now that would be worth, I don’t know, like millions of dollars,” noted Clark.

While Clark said he regrets not getting involved in bitcoin back in 2010-2011, when “bitcoins were super cheap,” he has since researched and written a technical guide to bitcoin, Bitcoin Internals, and expanded his research into the blockchain, looking at the value of blockchain technology for businesses and the potential impacts of decentralization. In our conversation, he described the early evolution direction:

“Right now, we can see that people are kind of looking at bitcoin mostly as just a regular payment system. While I do think that’s definitely a very important innovation, what we’re seeing is a lot of new technologies coming out that are more about things like smart contracts and decentralized organizations, which are right now really in their infancy. I think that those are actually going to be much bigger in overall impact than the payment system itself.”

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Decoding bitcoin and the blockchain

Introducing Bitcoin & the Blockchain: An O’Reilly Radar Summit

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When the creators of bitcoin solved the “double spend” problem in a decentralized manner, they introduced techniques that have implications far beyond digital currency. Our newly announced one-day event — Bitcoin & the Blockchain: An O’Reilly Radar Summit — is in line with our tradition of highlighting applications of developments in computer science. Financial services have long relied on centralized solutions, so in many ways, products from this sector have become canonical examples of the developments we plan to cover over the next few months. But many problems that require an intermediary are being reexamined with techniques developed for bitcoin.

How do you get multiple parties in a transaction to trust each other without an intermediary? In the case of a digital currency like bitcoin, decentralization means reaching consensus over an insecure network. As Mastering Bitcoin author Andreas Antonopoulos noted in an earlier post, several innovations lie at the heart of what makes bitcoin disruptive:

“Bitcoin is a combination of several innovations, arranged in a novel way: a peer-to-peer network, a proof-of-work algorithm, a distributed timestamped accounting ledger, and an elliptic-curve cryptography and key infrastructure. Each of these parts is novel on its own, but the combination and specific arrangement was revolutionary for its time and is beginning to show up in more innovations outside bitcoin itself.”

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Bitcoin and blockchain use cases won’t be sexy, but will be essential

Tim Swanson on the blockchain's potential and what the future of crypto-coins might bring.

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Researcher and author Tim Swanson originally built bitcoin mining equipment in China a couple of years ago, but as he explained in a recent interview, he’s moved beyond the trading aspects of bitcoin and now focuses on research and use cases. Swanson, who also works in business development at Melotic, a digital asset exchange, expressed some skepticism about the future of bitcoin as a currency and noted that the greatest potential in the technology lies in the blockchain:

“I’m fairly skeptical that what [bitcoin] can and will do is probably either overstated or overhyped. I think most of the actual use cases, especially with blockchains in general, will be very mundane and will be related to proof of existence, so things like notary services.

“If anyone’s looking for a particular use case, I’d probably talk about one called CAT, Consolidated Audit Trail. It’s related to the SEC requiring traders to put together a way to find out when trades take place. On any given day, there’s about 48 billion trades that take place under their purview, and putting together a system for this, they want to make it centralized. Maybe you can use blockchains in some kind of decentralized fashion for this, but the idea — it’s not a very sexy, headline-getting use case — but it’s something that’s particularly needed to ensure their transparency within the trading aspect of these different financial instruments globally.”

Swanson will host a free webcast — The Continued Existence of Bitcoin, Altcoins, Appcoins, and Commodity Coins — on Tuesday, December 2, to talk about the various coins being created and the legal and technical challenges facing the developer community. Read more…

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Four short links: 7 July 2014

Four short links: 7 July 2014

GV Library, Blockchain Equity, Organisation Anti-Patterns, and Cognitive Biases in Software Engineering

  1. Google Ventures Library — collection of design, engineering, founder docs.
  2. SWARM — crypto equity. Stock via the blockchain. (via Jesse Vincent)
  3. Organisational Anti-Patterns (Leigh Honeywell) — failure modes involving power and labour.
  4. Cognitive Biases in Software Engineering (Jonathan Klein) — failure modes for estimations, testing, and evaluations explained with psychology. Because brains.
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Four short links: 23 June 2014

Four short links: 23 June 2014

Blockchain Intro, Machine Collaboration, Safety Systems Thinking, and Where Keystrokes Go To Die

  1. Minimum Viable Block ChainWhat follows is an attempt to explain, from the ground up, why the particular pieces (digital signatures, proof-of-work, transaction blocks) are needed, and how they all come together to form the “minimum viable block chain” with all of its remarkable properties.
  2. Common Ground and Coordination in Joint Activity (PDF) — research paper on the components and requirements and failure modes of collaboration, with an eye to how machine actors can participate as collaborators. (via John Allspaw)
  3. Engineering a Safer World (Nancy Leveson) — Systems thinking applied to safety. Free download of the MIT Press ebook. (via John Allspaw)
  4. Scott Hanselman’s TipsKeep your emails to 3-4 sentences, Hanselman says. Anything longer should be on a blog or wiki or on your product’s documentation, FAQ or knowledge base. “Anywhere in the world except email because email is where you keystrokes go to die,” he says.
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Four short links: 17 June 2014

Four short links: 17 June 2014

Decentralised Consensus, Disruption Critiqued, Digital Reputation, and Stuff That Matters

  1. Erisa platform which allows developers and users to deploy consensus driven applications which rely on decentralized architecture and a consensus driven blockchain database backend. Open source (modified MIT).
  2. The Disruption Machine (New Yorker) — long detailed critique of the “disruption” hypothesis of Clayton Christensen, particularly questioning the case studies cited in The Innovator’s Dilemma.
  3. Web Reputation Systems and the Real World (Randy Farmer) — Don’t cross the streams. Good digital reputations should always be context-limited: the nature of the inputs should constrain the use of the reputation scores that are output.
  4. Bill and Melinda Gates Commencement Speech (Quartz) — excellent urging to work on stuff that matters. The pessimists are wrong in my view, but they’re not crazy. If innovation is purely market- driven and we don’t focus it on the big inequities, then we could have amazing advances and inventions that leave the world even more divided.
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