Passion, Potential, and Blockchain Brouhaha

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David True

President and Board Member, NYPAY

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If there is one thing discussions of blockchain and virtual currencies such as Bitcoin bring out, it is passion. Lots of it. If you’ve been in such a conversation you know just what I’m talking about. If not, have a look that the comments from Karen Webster’s recent piece—something of a takedown of the “blockchain is like the internet” argument.

Most of the comments are pretty solid, a few dismissive, but all are filled with passion.

Why so much passion? A few reasons come to mind.

First, the blockchain/virtual currency concept is hard to understand; many who write about it don’t fully understand it. As Dan Kaminsky wrote a few years back “The first fives times you think you understand it, you don’t”, and I agree. I’ve written a bit about it, but admit I don’t fully understand it, which is why I resist making weighty pronouncements.

But for many that complexity it freeing: it allows them, without cynicism, to project any number of possible outcomes on the idea, without fear of contraction. The complexity makes it something of a technology tabla rasa, supporting the idea, as Melanie Swan of the Institute for Blockchain studies said, “…the blockchain concept is a new organizing paradigm”

Well, maybe. But the fact such words are being written reflect flights of thinking loosely tied to anything concrete. Which bring me to next reason: faith.

Faith, per Wikipedia, is “…complete confidence or trust in a person or thing; or a belief not based on proof.” Think about the passion, the conviction you here in blockchain/virtual currency conversation—that is faith talking. Yes, that faith is based on a mathematical proof, but (complexity again!) I am sure most of those passionate speakers are not mathematicians and can only assess second hand how strong the idea is. And while there are a many examples of people trying to build business based on blockchain/virtual currencies, none have to date been transformative.

So much belief in the transformative power of blockchain & virtual currencies is based on faith in something poorly understood.

Building a business of any kinds require faith; building one based on blockchain/virtual currencies requires vast amounts of faith. And when faith is driving a discussion, well, think of the look in the eyes for Bitcoin enthusiasts, especially in the early days? Looked like they were born again, no? To quote from one of the comments on the Karen Webster piece:

“…powerful economic forces are at work against the banks’ attempts at private blockchains. If the banks had conceived of blockchain technology before Bitcoin, then yes, perhaps they could have succeeded in building an exclusive, members-only club”

There’s passion in that quote, and also a hint of the third reason for I see for the heat of blockchain/crypto currency discussion: disruption.

Disruption is sexy. And if something disrupts legacy financial players and bypasses governments, that is beyond cool. And that is what a decentralized, blockchain/virtual currency system offers. From Coindesk’s home page:

Central governments can’t take it away

Remember what happened in Cyprus in March 2013? The Central Bank wanted to take back uninsured deposits larger than $100,000 to help recapitalize itself, causing huge unrest in the local population… That can’t happen with Bitcoin. Because the currency is decentralized, you own it. No central authority has control, and so a bank can’t take it away from you. For those who find their trust in the traditional banking system unravelling, that’s a big benefit.

With that you’ve captured some portion of both Rand Paul and Occupy Wall Street supporters, who bring with them their own passion.

Of these suggested reasons, complexity is prime, as it makes it damn near impossible to contest anyone’s opinion. Combined with faith and disruption, you’ve got a fertile ground for heated debate, with no end in sight.

What do I think? Well, blockchain/virtual currencies are significant developments, and their most significant impacts will be in areas other than payments. But, as noted earlier, I don’t understand it all well enough to have a strong opinion.

I am sure, though, we’ll have many more passionate discussions over the coming years. Buckle up and enjoy.

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