Four months ago I published a piece in American Banker discussing the strangely trendy topic of “blockchain technology”, in which I explain my skepticism of the entire notion that “the technology behind bitcoin” could serve any useful function for the financial intermediaries it was specifically designed to replace. Bitcoin’s technology is as useful to the banks trying to copy it as an engine to a carriage-drawing horse.
After considering the question further, I have started to hold a stronger view on it: The technology behind Bitcoin is suited only for Bitcoin, and nothing else. Bitcoin’s software is a peculiar and highly sophisticated edifice built with one purpose only: creating a digital cash whose supply cannot be inflated by anyone, and whose operation does not depend on any third parties. Bitcoin’s technology is not a new invention, but a new combination of several already existing technologies and ideas like cryptogtaphy, distributed networks, and Austrian monetary economics. There is no reason to believe that this peculiar combination of ideas will be suitable for other uses, but there is something that strongly suggests it won’t be suitable for any other use: The design of bitcoin has been freely available for anyone to copy and imitate for 8 years now, but has not been used for any commercially viable applications except Bitcoin and its inconsequential replicas. If this combination of technologies were suited for banks to clear payments, smart contracts, medical records, or some other such field, wouldn’t we have seen one firm deploy this technology for a commercial venture in that space? There are countless start-ups going through Venture Capital money making presentations about how “blockchain changes everything” but none have earned a cent from selling actual “blockchains” to someone who is using them in a commercial venture.
The sooner this “blockchain” mania ends, the better for everyone involved. Those distracted by “blockchain technology” and”Bitcoin 2.0″ buzzwords are wasting their time on inconsequential pipedreams, and failing to realize the real and important implications of the one and only working blockchain, Bitcoin, which allows anyone in the world access to digital cash whose supply cannot be inflated by anyone.