Distributed Ledgers Part I: Bitcoin is dead

“What awaits us is never what we were awaiting” French Fintech Investor, circa July 2015, Washington DC.

I uttered the words “Bitcoin is Dead” at FintechStage in Barcelona a few months ago, see previous post here. Strong words for a non-techie who has a limited understanding of the subtleties of all things crypto. BTW, this is your cue to mock me.

Other than the pure pleasure of shock and awe and the weak ego driven desire to win an Oxford debate, what possessed me to utter such words and what exactly do I mean by these words.

Let me clarify.

First, I am in awe at whoever came up with Bitcoin. Simply brilliant in its simplicity and theory. Second I wish the currency itself was less volatile and the protocol tweaked so the blockchain could deliver on its promises. Third, I never lose sight of the facts, see my previous post of First Principles, here.

And the facts are:
– Although proof of work is the best there is out there crypto-security wise, it is very energy intensive and not optimized to scale. It is a massively inefficient protocol by design. Further the forward state of the Bitcoin blockchain, even if using proof of work, is dependent on merchants, exchanges, miners, wallet providers, multi sig service providers… and can be or is being undermined/centralized in different ways (see the latest development with forks in the chain and miners cherry picking which transactions to confirm).
– Block size is an issue and a limiter – there are currently many discussions around this topic.
– Speed of transaction confirmation is an issue and a limiter. I have been told there are a couple of initiatives to deal with speed but I am unsure of status or feasibility.
– Miners who are tasked with both mining for new blocks and confirming transactions,

Originally appeared at: https://www.linkedin.com/pulse/distributed-ledgers-part-i-bitcoin-dead-pascal-bouvier-cfa