Advertised as “the first computer with native hardware and software support for the Bitcoin protocol” the 21.co Bitcoin Computer is the first of its kind and will catalyze a host of unforeseen use-cases for the bitcoin blockchain. The first product from the startup founded by Balaji Srinivasan, CEO and board partner at Andreessen Horowitz, (there are some valuable videos posted at the end of this post that will give context to some of the vision behind this company) 21.co has raised over $116 million dollars, from an impressive array of backers including but not limited to Qualcomm Ventures, Andreessen Horowitz, Data Collective, Khosla Ventures, RRE Ventures, Yuan Capital, Jeff Skoll and Peter Thiel.

Despite these early accolades the launch of 21’s first product (the 21.co Bitcoin computer) was met with surprisingly harsh criticism and skepticism (and in some instances confusion) by many informed participants in the bitcoin and blockchain ecosystem. This stemmed from a fundamental lack of understanding regarding the devices intention and potential. This ain’t your mama’s bitcoin miner. So let’s dive into what makes this device so innovative.

What is It?

The 21.co Bitcoin Computer is a hardware device that helps users and developers interact with the bitcoin blockchain. It acts as a bitcoin miner, blockchain node and blockchain interface and is comprised of the following hardware and software elements:

Raspberry Pi 2

Bitcoin Miner

Blockchain Node

21.co Custom Operating System

While the hardware itself is nothing revolutionary the associated operating system acts as a foundational toolkit to aid developers in building custom applications using bitcoin and the bitcoin blockchain. Visit the 21.co “Learn” page to view tutorials on how to build custom bitcoin applications using the Bitcoin Computer. 21’s self-described goal is to help “developers to build bitcoin-payable apps and services”.

For those that are less tech-savvy then myself here’s a palatable analogy; think of the early internet and modems. Many of us remember a time where a modem was necessary to dial into and “seamlessly” connect with the early internet. The 21.co Bitcoin Computer is similar in that it is a hardware device that simplifies the process of engaging and interacting with the bitcoin blockchain.

Addressing the Skeptics

One of the key hangups many bitcoin enthusiasts first face when considering the Bitcoin Computer is the tendency to percieve the device’s sole purpose as a bitcoin miner or node. If this were the case the device would no doubt be an abysmal failure with an almost non-existant likelihood of ever earning enough mining rewards to recover the initial cost of purchase ($399).

I presume the reason that 21.co has released the Bitcoin Computer as their first product is to get the technology into the hands of developers and provide them the building blocks to create new tools, applications, and companies atop this technology. The primitive hardware that has been developed should be considered a bare-bones proof-of-concept. The evolution of this hardware will likely lead to the development of a chip-equivalent that could be imbedded in any internet-ready device. I imagine we will soon hear of plans to imbed 21.co bitcoin computer chips into laptops, tablets, and smartphones at a fraction of current costs; just as modems were once incorporated into the hardware of every desktop computer.

This prediction is further supported by the participation of Qualcomm Ventures in the funding round for 21.co. Qualcomm predominantly operates in the mobile space — I believe this to be a big indicator of their intentions to exploit 21’s technology in the not too distant future.

Removing the Barrier to Entry for Bitcoin Ownership

By imbedding a small bitcoin miner into every single mobile device a major issue for bitcoin is resolved, the barrier to entry. Currently to own bitcoin you must have the know-how to mine bitcoin or purchase them (which most often involves verifying your identify, complying with AML/KYC requirements, and linking a bank account), all of which is adoption prohibitive. If your phone is mining bitcoin, no matter how minute a contribution to the network, it will consistently earn a small number of Satoshi’s (the smallest unit of bitcoin). The process is described in greater detail here in 21.co’s terms of use. Barrier removed!!

Many claim that in the future you won’t even realize you are utilizing bitcoin, it will all be in the background. With the 21.co Bitcoin Computer this may very well become a reality for the majority of “bitcoin users”. Fundamentally the chip would allow the devices owner to convert a small amount of electricity into Satoshi’s at their convenience.

Got it! So this will eventually be a computer chip that earns my device a consistent stream of Satoshi’s and I won’t have to deal with the hassle – Cool! So, what the hell can I do with something as worthless as a Satoshi?

OK, you get it now. In a couple years your smartphone will have a 21.co bitcoin chip in it that will help the phone seamlessly interact with the bitcoin blockchain. It will ensure a steady supply of Satoshi’s is maintaned on your device and battery can be converted into additional Satoshi’s whenever necessary — Sweet! But why would Apple, Samsung, and other incumbants want to include this obscure new technology into their own hardware? It’s a great question that will require you to think of bitcoin as more than money, rather recognize that a single Satoshi represents an entry into a transparent, distributed, censorship-resistant ledger. Once you realize this possibility the applications begin to come into view…

A device that earns Satoshi’s for you would allow you to interact and post transactions to the bitcoin blockchain as a “proof mechanism”. Applications might include the following:

Timestamp a Photo: Imagine a future where every photo taken on a smartphone, tablet, wi-fi capable SLR camera had the option to make a blockchain-based confirmation showing “proof of ownership”. You might have a button on Instagram to verify that you were the originator of the image and state your claim on the blockchain for only a few Satoshi’s.

Imagine a future where every photo taken on a smartphone, tablet, wi-fi capable SLR camera had the option to make a blockchain-based confirmation showing “proof of ownership”. You might have a button on Instagram to verify that you were the originator of the image and state your claim on the blockchain for only a few Satoshi’s. Timestamp a Tweet : Want to verify a tweet to the blockchain to ensure it is never censored? Click the blockchain option before sending and your 21.co chip will send a couple Satoshi’s out and get it entered onto the ledger.

: Want to verify a tweet to the blockchain to ensure it is never censored? Click the blockchain option before sending and your 21.co chip will send a couple Satoshi’s out and get it entered onto the ledger. Timestamp a Memo : Are you a comedian and have a great joke that you originated but fear might be stolen by your competition? Make a memo of it and timestamp it to the blockchain as “proof of authorship”.

: Are you a comedian and have a great joke that you originated but fear might be stolen by your competition? Make a memo of it and timestamp it to the blockchain as “proof of authorship”. Timestamp a Audio Correspondence: Russia recently contested the claim that Turkey has initiated contact with the jet they recently shot down. Had Turkey utilized a 21.co chip in their digital audio equipment they could validate the claim unequivocally that the attempts to contact the pilots had been made. It would make sense to require this kind of protocol in international agreements.

Russia recently contested the claim that Turkey has initiated contact with the jet they recently shot down. Had Turkey utilized a 21.co chip in their digital audio equipment they could validate the claim unequivocally that the attempts to contact the pilots had been made. It would make sense to require this kind of protocol in international agreements. Timestamp a GPS Coordinate: Want to prove your location? Drop a pin on Google Maps and click the blockchain proof option to have your 21.co chip send some Satoshi’s and document the location and time on the bitcoin blockchain.

These are just a few abstract examples but the implications of such capabilities are far-reaching and the ease of integration with existing mobile apps would not be difficult. Furthermore it gives context to the possibility that bitcoin, with the support of hardware such as the 21.co bitcoin chip, may gain mainstream adoption with a use-case separate from “bitcoin the currency”.

How 21.co Solves Core Issues of the Bitcoin Blockchain

A future where the 21.co bitcoin chip is standard in internet-ready hardware bodes well for the bitcoin blockchain. In addition to removing the barrier to entry for bitcoin users it would also help to address two key challenges:

Supports mining decentralization

Enabling Micropayments

In a recent correspondence on twitter Balaji Srinivasan implied that 21.co would eventually provide a means to further decentralize the mining-pool ecosystem referring to “p2pool v2”:

@shibuyashadows @CTZN5 @juscamarena @MrChrisEllis We have a way to make it work with any pool, but ultimate goal is basically "p2pool v2". — Balaji S. Srinivasan (@balajis) November 25, 2015

Micropayment remain a challenge for the industry such that it is widely recognized as a disruptive opportunity for the internet but few have discovered the keys to exploiting it. 21.co promises to help to exploit this opportunity further by providing tutorials on 3 primary means of enabling micro transactions

Direct on-chain transactions

Off-chain transactions with Bittransfers

Payment channels

Final Thoughts and Speculation for the Future of 21.co

The more you understand the applications of 21.co the more you recognize the genius of the product and it’s potential contribution to the bitcoin ecosystem. In the short term I am excited and optimistic to see what developers around the world come up with the release of these foundational tools. As 21.co’s hardware matures I fully expect to see the chip find its way into every mobile device. Furthermore, I think it is entirely reasonable to expect bitcoin’s first “killer app” to come as a result of the vision 21.co has provided.

UPDATE (12/1/2015): For a more in-depth review of the challenges of P2Pool Mining please read the following: P2Pool and low power miners

Past lectures by the 21.co founder and CEO:

Silicon Valley’s Ultimate Exit

The Evolution of Bitcoin – Talks @ Goldman Sachs