Pity the non-technical writer asked to tackle cryptocurrencies and blockchain. This Payment Source article tackles the topic but represents pretty much everything wrong with Blockchain and crypto today. These terms lack definition and the complexity associated with adjusting each implementation to a specific use case makes any broad-brush statement incorrect at some level.
For example, crypto like bitcoin isn’t anything like crypto like JPM Coin. JPM Coin is a closed loop implementation that may as well have been developed on an IBM Mainframe. The nodes are operated by a single bank and so while there may be multiple distributed nodes it is also possible there is only one big node. Bitcoin, on the other hand, isn’t operated by a single entity and in fact, its blockchain needs to enable operation of a node by potential criminals and operate over unreliable and untrusted networks in a distributed environment with thousands of nodes. Those are two very different problems that will utilize two very different implementations.
Comparing a simple immutable distributed ledger that is deployed by a single entity with a solution like that created by Satoshi Nakamoto (whoever that is) is frustrating. This frustration is multiplied by a statement like this:
” ‘Blockchain technology currently is slow and not mature, but when it becomes fast and more efficient, it will disrupt the current banking industry,’ said Garbiel Wang, analyst with Aite Group. ‘At that time, banks that were slow to wake up to blockchain will be asking why they didn’t adopt this earlier.’ ”
I’ll tell you why. I’m a #BlockchainSkeptic not because I think it will fail, but because every implementation demonstrates entirely different characteristics and so matching a blockchain implementation that will properly support a specific use case is a bedeviling problem. I’m sure some solutions will be found, I just suspect there will be fewer of them than we think.
Related to speed, Ethereum has been trying to roll out a faster version for years and who knows, maybe they’re getting close. But until I hear mathematicians state that the algorithm operates as specified I’ll remain a skeptic. I’d also suggest that the individual that can create an algorithm that is as capable as Bitcoins, but supports thousands or millions of transactions a second, will be a Nobel Prize recipient.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group