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Home Bitcoin News

Bitcoin Is Blockchain’s ‘Killer App,’ But Blockchain Is Catching Up

by The Future Coin
June 21, 2020
in Bitcoin News
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Bitcoin Is Blockchain’s ‘Killer App,’ But Blockchain Is Catching Up
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Bitcoin Is Blockchain’s ‘Killer App,’ But Blockchain Is Catching Up 101
Source: Adobe/rybindmitriy

The bitcoin (BTC) vs. blockchain debate is almost as old as BTC itself. For years now, bitcoin maximalists have argued that blockchain without a cryptocurrency is mostly a slow database, while blockchain advocates have argued that bitcoin only scratches the surface of what decentralized ledgers can do.

Which side is right? Well, speaking to experts on both sides of the debate (and in the middle), it would seem that both arguments have something going for them.

Yes, blockchain without bitcoin is yet to find a truly killer application. But with a large number of startups and companies working on novel applications of blockchains in lucrative areas, it could very well be only a matter of time before that all changes.

Bitcoin

Summarizing the key arguments of the Bitcoin side of the debate, a spokesperson for HDR Global Trading (the owners of BitMEX) tells Cryptonews.com that blockchains are too cumbersome for most non-cryptocurrency uses.

The spokesperson says,

“Decentralised ledger technology such as blockchain requires every node to have a full copy of the database, and to verify every transaction under consensus rules. This is a complicated data structure which is slow, inefficient and resource-intensive to process.”

In fact, HDR that most people “simply wouldn’t choose blockchain for the majority of conventional applications.” While advocates have championed the resilience and redundancy benefits of blockchains or distributed ledgers, HDR’s spokesperson claims that such advantages “can be achieved through a SQL database.”

Blockchain

Of course, not everyone within crypto takes such an unforgiving view of blockchain and decentralized ledger technology (DLT).

“We are already seeing multiple scenarios in which businesses and governments are utilizing distributed ledger technologies in a variety of processes,” says eToro’s chief blockchain scientist Dr Omri Ross, who also suggests that blockchain will enjoy wider adoption before Bitcoin and other private decentralized cryptocurrencies.

Likewise, Ross believes that Bitcoin may struggle to have a significant impact on the finance industry and beyond.

He explains,

“For Bitcoin to impact the payments industry, it will need to either achieve scalability or fulfil the role of ‘digital gold.’ Payment in bitcoin still seems a bit far-fetched without secure AML-compliant and scalable solutions, but great teams are working on trying to make that happen.”

On the other hand, Ross predicts that the broad impact of crypto-assets in general “will be a reduction of dependencies in the global transmission of funds and access to financial services to anyone with access to an internet connection.”

This is a view echoed by Graeme Moore, the head of tokenization at Polymath, which has developed a platform for issuing and investing in tokenized securities.

He tells Cryptonews.com,

“We believe that every financial security on Earth will become a security token (blockchain-based financial security). This market is orders of magnitude larger than the market for cryptocurrency alone.”

To illustrate, Moore explains that there are roughly over USD 1 quadrillion of derivatives in the world and USD 280 trillion in real estate, yet only USD 100 trillion in the supply of broad money.

In essence, his view is that blockchain technology is key to tapping into such value and making it much more liquid.

He adds,

“Blockchain technology clearly found its first and most obvious use case as money and a store of value. But we are just getting started exploring the other, larger use cases with this new design space.”

Bitcoin vs Blockchain

To support the claim that blockchain – and not necessarily bitcoin – will offer significant breakthroughs in the finance sector (and beyond), Moore suggests that tokenization of assets and the wider application of distributed ledgers will bring massive efficiency gains.

“Let’s compare a capital distribution like a dividend payment for a private company in the legacy world versus a tokenized private company using Polymath,” he says. “Using Polymath’s technology, there is a 99%+ cost reduction and a 99%+ time reduction.”

BitGo’s Benedict Chan says that the distributed nature of blockchains and distributed ledgers inherently makes them more accessible to the general public.

He tells Cryptonews.com,

“While traditional finance payment rails are efficient at providing financial services within local regions to some individuals, blockchain technology is able to make financial services available to every person with access to the internet. There are now many more individuals than before in developing countries (from India to Indonesia) that have access to an account offering exposure to the movement of USD, commodities, and other financial products.”

Omri Ross also affirms that there “are plenty of examples where distributed ledger technology is providing greater productivity and efficiency.”

As an example, Ross cites Cambridge University’s Global Blockchain Benchmarking Survey, which looked at how blockchain is being used by international companies.

Among other things, it found in 2019 that “72% of live [blockchain/DLT] networks are currently primarily used to reduce costs for participants through reduced reconciliation efforts.”

Ross notes that the “adoption of DLT in the public sector and central banking has taken a leap forward in recent years.”

He adds,

“I think the rapid growth of interest in the space has been primarily motivated by the release of Facebook’s Libra whitepaper and the subsequent release of the blockchain strategy by the Chinese government.”

In other words, bitcoin may still arguably be the most radical and innovative product associated with blockchain out there. But with a growing number of companies and organizations now turning to DLT, it may be only a matter of time before blockchain catches up.



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