Bitcoin Q&A: “Blockchain, not Bitcoin”

Noah asks, “Debunking the ‘blockchain not
Bitcoin’ point of view. How do we persuade average Joes that the ‘blockchain
not Bitcoin’ line of thinking is incorrect?” Well, first of all, why waste your time? If they want to go and play the ‘blockchain
not Bitcoin’ game, let them go and play [it]. I don’t think it’s our job to persuade other
people about the merits of this technology, if what they can understand about this technology
is a slogan that has really played itself out since 2014. I don’t think there’s any point in trying to persuade
people about the ‘blockchain not Bitcoin’ trope. I think it’s a cliche. When somebody says, “I believe in blockchain
but I’m not interested in Bitcoin,” they’re basically saying, “I don’t understand blockchains,
but I’ve heard enough to think that I can sound cool by dismissing Bitcoin and praising
blockchains.” I’ve heard a lot of people say that, it’s
just repeating a cliche. Why do blockchains not work without bitcoin,
or rather why do blockchains not work without an intrinsic, valuable asset that is the basis
for a game theoretical model of security? The reason is simple. A blockchain, as a data structure, is a fairly
inefficient data structure. The reason we use a blockchain is to achieve
decentralisation. In order to achieve decentralisation, you
have to be able to validate transactions without giving anyone the power of veto, or the power
to control the network. You have to decentralise the process of validation. The best mechanism we’ve found so far for
decentralising the process of validation is by having a consensus algorithm that depends
on competition — whether that’s proof-of-work, proof-of-stake, or something like that. In order to have competition, you need risk
and reward. In order to have a reward that is meaningful,
you need an intrinsic token. You need something of value that people are
trying to get, which keeps them playing fair. If you don’t have something of value, you
don’t have a basis for that competition. Without a basis for that competition, you
don’t have security. Without security, you have to control validation
centrally. Without decentralisation, there’s no point
in doing a blockchain. You might as well use a replicated database. It’s going to be far more efficient. The purpose of blockchain technology and a
consensus algorithm is to decentralise control, to provide censorship resistance and neutrality
in a global open platform; in order to do those things, you need some mechanism to decentralise
validation. “Debt and credit.” “Given that most of the global economy relies
heavily on the extension of credit from major financial institutions (for example: borrowing
money to start a business or buy a home), how do you see the blockchain playing a role
in this space? I know companies like Bloom use the blockchain
to anonymise credit borrowers. But the concept still relies on institutional
lending. Is there a way to build in the concept of debt,
or negative balances, into blockchain addresses? Assuming that lending can take place on the blockchain,
what mechanisms are there to enforce loan defaults? Off-chain, banks and the government can
issue liens on income or seize collateral, which wouldn’t be possible on-chain.” Great questions. I honestly don’t know how the area of
credit is going to be [handled]. I think the idea that everything has to be
done on the blockchain, or that all currencies will be cryptocurrencies, isn’t really where
we’re going. Just because we have a cryptocurrency that
is an asset-based instrument, that is not a debt-based instrument, where you can’t have
loans or negative balances. There is no fractional lending or any of the
other tricks used to create a greater supply or liquidity of credit in an economy. That doesn’t mean you can’t still do those
things with fiat. Maybe the role of cryptocurrencies is to offer
a form of sound money, for people to be able to save their wealth and accumulate capital
for future generations. Maybe other types of instruments such as fiat
or cryptocurrencies heavily modeled after fiat (fully centralised, confiscatable, fractional
reserve) would be built. In fact, I think we’re going to see that kind
of cryptocurrency being built. Don’t worry! When it comes to issuing credit out of thin
air, creating money that doesn’t exist, and inflating bubbles by spreading liquidity through
centralised decision-making, all of those shenanigans… Governments are full of innovation. They will soon develop cryptocurrencies
(or what they will call “cryptocurrencies”) and blockchains, essentially highly centralised databases,
that allow them to continue business-as-usual with not even a pause in their standard practices. They will create the next giant financial
bubble of out-of-control predatory lending, now brought to you on a “cryptographically secured
blockchain,” which is of course just a database. FedCoin is coming. It will come to many different countries. It will pretend to be a cryptocurrency and
a blockchain. It will offer fractional reserve lending,
full surveillance, controls, confiscation, and all of the other wonderful things that
we have with fiat. Only now on a “blockchain.” Don’t worry, debt is not going away just because
of cryptocurrencies. The only difference is, you now have an option;
that option is, you actually have some currency to store wealth for yourself and future generations
that cannot be inflated to shit, or easily confiscated, or used to create fractional
reserves. Let them have their fiat. Maybe you can choose your cryptocurrency instead.

46 thoughts on “Bitcoin Q&A: “Blockchain, not Bitcoin””

  1. thats like saying i love my children but neglect them. if youre in it for blockchain, youre in it for bitcoin too. bitcoin is part of the blockchain. not all fruits are apples, but all apples are fruits

  2. great Andreas these are the mindbreaking questions that are around – answer is still unclear but "less unclear" maybe you can come back to this idea of FED-coin giving us the opportunity to maintain our willingness for consumption now and enslavement later which is credit in reality with fiat right now and as it was in the past (in contrary to the concept of savings-now and consumptions-later)

  3. Are we mainly talking Bitcoin? Cause given that Ether is not capped and the supply is controlled by the Ethereum team, how is that different than fiat?

  4. "Blockchain, not cryptocurrency" is the real problem.

    1:00 yes, exactly. People say it to sound like they know what they're talking about when in fact they don't.

  5. Antrea, in my mind, I see no reason for an inflationary cryptocurrency (eg. Fedcoin) would be adopted by anyone. When you have a stable deflationary currency then why would you ever go into debt? Why would lending be practised on that scale? Banking, insurance and pension would be obsolete. What is your view on this?

  6. the underlying issue is strongly related to the skewed ownership distribution of BTC. roughly 1000 people own 40% of all coins afaik.

    no one wants to buy a 10k BTC, knowing that others (whales) got in when they were worth just pennies.. the risk that whales or mtgox dump on you is just too high..

    thats why everyone is investing in those shitty icos these days. which pretty much is the same statement as "blockchain yes, bitcoin no"

    please prove me wrong 😉

  7. When you say 49% percent cointinues mining the honest chain, what do you mean by that? Arent all the nodes already accepting the dishonest chain as soon as it has more proof of work?

  8. Hi Andreas can you examine this idea of mine about bitcoin future can it work? what do you think about?
    White paper for Bitcoin future. 🙂
    Bitcoin is a computer program that will takes over the Planet. Our planet needs 5 global institutions to solve planetary issues. 1. Satoshi Nakimoto Institute 2. Land Institute 3. Water Institute 4. Air Institute 5. Space and beyond institut.

    Up to certain bitcoin block mining should be done by these 5 institutions only. Governess : Let's say Global Water Institute: its policy and president have been nominated by ocean and clean water lover around the world, everyone can be member. And pay monthly small fee to be able to vote for president. This institute does water cleaning, ocean guarding, every common good thing about water. since they are mining bitcoin, they can hire people buy equipment ect. The purpose is keep planet save from human danger. And so other institutions organize same way and goals. And bitcoin protocol can be changed and developed by this institutions only. Satoshi Nakomoto Institute will deal with government. Create bitcoin integration Programs for tax collection, Id cards, voting mechanism ect. By doing so I think bitcoin will be computer program for better world.

  9. Hi Andreas, another great presentation! How do you feel about Microsoft acquiring Github? I am not a technical geek nor do I profess to knowing ALL in this historical space (I do try lol!) However, I have been reading concerns regarding 'all code' having been written on Github that has now been acquired by Microsoft. Does this concern you? Source:
    Reddit concerns:

  10. This video just put the bias on Bitcoin too far from what I can consider "smart". Andreas, please, there is Blockchain without Bitcoin and you know that. Big IT companies and experts know very much well what the Bitcoin blockchain proposal is, they know that is not sustainable in the long run, and they are evolving. Just saying.

  11. There are already decentralized debt based cryptocurrencies. Stable coin DAI is a liability from MakerDAO. MakerDAO is a decentralized and automatically collateralized fractional Reserve Bank from which you can borrow pledging eth.

  12. Thank you Andreas. We should all take your example, and teach others what we learned from you. Everybody, please start setting up nodes. It is our duty.

  13. Is there a reason why the decentralisation of the process of validation could not be achieved by incentivising competition by the use of a reward of fiat currency instead of a token asset. i.e. instead of miners receiving 1 bitcoin they will receive x million dollars, and x will increase based on the difficulty of the validation. (im a non technical individual)

  14. Blockchain is awesome! I prefer new blockchain platform Contract Vault….They are based in Switzerland and suppoted by Kool Savas

  15. Many people think bitcoin is just a means to do money laundering and other black market activities. "Blockchain not Bitcoin" is marketing to those people and the bitcoin community benefits from the attention to the technology that this marketing brings.

  16. Andy, I can save physical precious metals in a safe in my closet.. I understand a digital asset with similar properties offers many benefits such as sending value across borders, etc. But what have we accomplished if we don't have merchant adoption at the micro-transaction level? If BTC is not legal tender, will there be a behind scenes atomic swap into "fedcoin" tracking my every move, with the possibility of being "turned off" if they don't like my behavior?

  17. Hey Andreas,

    First of all, massiv thanks, your books and conferences are so far the best way to learn about blockchain (I also learned english thanks to it !). I dont know where should we ask questions, their's maybe a Reddit post or smthing, I cant find it out.

    > Does blockchain means that every users have to own a smartphone in order to join the network (or another stuff) ? I'm concern about the limited supply of ressources and the fact that most minerals in smartphone can not be recycled; isnt that a scalability issue ?

    > PoW security relies on the cost of energy it'd ask to have more than 51% of the network's power. Their's massiv flaws on most CPU, people dont patch their PC, etc.. dont you think a botnet + quantic calculator + super calculator could beat a blockchain ? (i''m thinking about an attack from government)

    Again, thanks for being yourself, meeting you one day would be really cool

  18. (FYI only) Mr. (aceboy) Andreas M. Antonopoulos is a technologist – and serial entrepreneur – who has become one of the most well-known and respected figures in bitcoin. Learn your asses off – it will blow hair back and knock your sock of for the next 300 years…

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