cool hit counter To Bitcoin 10 Years Series One: The true heir to Satoshi's vision is the distributed ledger, not the tokens_Intefrankly

To Bitcoin 10 Years Series One: The true heir to Satoshi's vision is the distributed ledger, not the tokens

Author Compiled by Adam Krellenstein | Insider

Adam Krellenstein is the co-founder and CTO of, Inc. The company is a fintech company that focuses on combining traditional financial markets and blockchain technology. He was also one of the first to try using the Bitcoin blockchain for more experimental purposes.

The 10th anniversary of the bitcoin white paper (bitcoin white paper), which is undoubtedly one of the most important technological achievements in recent history. And 10 years later, the community it created and united around its grand vision is in crisis.

Over the past 10 years, we have worked to develop protocols that go far beyond Satoshi's initial efforts in terms of scale and ambition, but we are still trying to answer fundamental questions about the nature of the technology and the role it should play in our society. Yes, these still include basic questions such as "What is blockchain?" and "What's the point of blockchain?"

It is difficult to understand the relationship between Bitcoin and blockchain technology, token systems and smart contracts, public blockchains and permissioned blockchains. There is a view that blockchain technology is best suited for creating digital currencies ("tokens") such as Bitcoin, and another view that blockchain technology holds promise for creating new types of decentralized computer applications ("smart contracts").

Meanwhile, another debate is going on about the value of different types of blockchain networks, specifically whether blockchains should be "public" so that anyone can join the network, or "licensed," where membership in the network is more or less fixed.

In fact, these two arguments closely cite off: it turns out that token systems are more useful than smart contracts when layered on a public blockchain consensus protocol.

Tokens and more tokens

Reviewing today's Bitcoin white paper, it's striking that Satoshi is exactly right about the best use of the public blockchain:digital currency and payment systems.

The white paper only discusses the token system and the public blockchain, so we'll just have to figure out for ourselves how to best leverage his groundbreaking invention and extend it to other applications. A lot of people try to do that.

For my part, I have spent a lot of time thinking about these issues and have had the rare experience of working closely with both sides of both debates. First, as one of the creators of the cryptocurrency counterparty, and then as one of the founders of Symbiont.

Counterparty is a public blockchain smart contract platform, although it focuses on token issuance and trading, while Symbiont is a fintech company that develops and licenses its blockchain-based smart contract system to improve the infrastructure of traditional financial markets.

What I've noticed from Counterparty's work, and from close observation since Ethereum's beginnings, is that while both systems were originally built to support powerful smart contract applications, their primary use is to create and transmit the simplest of digital tools - tokens.

Through counterparties, our vision is to create a trustless network for decentralized finance, with no middleman. We implemented token balance smart contracts, the world's first decentralized, trustless asset exchange, a platform for predicting markets using contracts for differences, a protocol for transparent elections, and a provable fair gaming system. Everything we do is as an extension of the Bitcoin blockchain itself, not as a separate network. However, counterparty adoption has always revolved around its token issuance and trading capabilities, rather than based on the more advanced and exciting applications it supports.

Similarly, it's been three years since Ethereum was launched, and pretty much everything anyone does with it can be easily managed by colored coins (another way to add support for simple tokens on top of Bitcoin). Ethereum has gained attention and excitement about its theoretically unlimited capabilities, but so far people have actually only used it for the simplest of decentralized applications.

Part of the reason why the technology used by Ethereum has been lackluster is that it is difficult to build real applications securely on its smart contract language, solidity. Nonetheless, it's surprising that any state-of-the-art Ethereum smart contract adopted is a cat-themed trading card game, not unlike Genesis or Rare Pepes, which launched on the counterparty side of the table long ago.

Like its previous counterparts, Ethereum has been used almost exclusively to track tokens in the past, although it has the potential to do more.

Where there is a need for trustlessness

The reason, I think, is that a smart contract system for the general public is not a good idea.

The value of acquiring a given application and putting it on a blockchain platform is primarily in making that application more widely accessible and trustless. For a simple tool like digital cash, this has tremendous value. Digital cash benefits directly from wider adoption and purity of form. That said, Bitcoin as a payment system and store of value, without (simple) confiscation, devaluation, etc., is a better currency than fiat because it lacks a central point of control and disruption.

However, for more complex interactions between end users, where efficiency is more important than universality, it is not too difficult or painful to rely on a "higher authority" to play the role of a trusted intermediary. The interactions between individuals are not complex enough for us to translate them into decentralized computer programs.

On the other hand, smart contracts are more promising in the licensed blockchain space. The target users are not individuals, but large organizations (e.g., governments and corporations). The biggest benefit of a licensed blockchain is not greater inclusion or transparency, but greater consistency and correctness than the existing infrastructure, which cannot provide a single source of facts for multiple parties in a decentralized manner.

"Enterprise DLT is designed to take existing business logic for fax and telephony management and then encode that logic into a shared computer application, automating workflows and reducing operational overhead.

Large institutions tend to interact with their peers in complex and sophisticated ways, and, as long as they are large, there is no natural third-party option for "higher power" that they can rely on for global coordination.

Ideally, this orchestration would be managed by blockchain and smart contracts as a shared system of records and a single source of facts, without giving a single "super user" access to a central canonical repository of mission-critical market data.

We've always known that.

Blockchain is a way for multiple parties in a decentralized computer network to see a consistent view of the world, so blockchain technology is primarily valuable when replacing consistent centralized systems with consistent decentralized systems (the way bitcoin replaced fiat currency), or transforming inconsistent decentralized systems into consistent decentralized systems (the way smart contracts will replace decentralized financial market infrastructures).

In the former case, the value created is the unmediated role of central management; in the latter, it is the increased efficiency of a coherent, authoritative source of truth in a decentralized system.

Token systems, the simplest smart contracts, should then be as widely accessible as possible, and smart contracts are most useful in licensing settings where they are faster, cheaper, easier to use, and can solve specific business problems in a deliberate and controlled manner.

I have come to the conclusion that the greatest use of a public blockchain, as originally envisioned by Satoshi Nakamoto, is actually as a digital currency and payment system. Satoshi's innovations since the launch of Bitcoin are partially reflected in the enterprise DLT space, which does not compete with Bitcoin.

Instead of replacing fiat currencies with digital gold, they can be used to build new types of databases that can support workflows that are completely unsuitable for management in the context of traditional client-server frameworks. Efforts to build complex smart contracts on public blockchain networks do not address the problems inherent in the design of existing decentralized systems (the Bitcoin approach) ; Rather, it strives to be a more useful version of a more centralized system.

Compile | Insider

Author Adam Krellenstein

Article source |

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Reprinted with attribution.

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