Full disclosure; I’m a crypto enthusiast, I work for PayPal, and I’m a co-founder and advisor to BrainBlocks, a Nano payment gateway (my day job has no involvement with my role in the crypto community). I’m cautiously optimistic about the future of blockchain tech.

Blockchain

Blockchain started out as a technology designed to power online, digital, trustless currencies. That came as a surprise to almost everybody.

First, it was surprising that the technology was even viable. Whatever else you might say about it, blockchain is something genuinely new and for lack of a better word, groundbreaking.

Second, it was surprising that anybody was even interested, beyond enthusiasts in the world of cryptography and computer science. That interest may have been fueled in large part by the vast number of speculative investment opportunities. But as a result, the mere concept of blockchain has taken off like wildfire.

Third, it’s surprising that blockchain is now such a popular concept that it’s being mooted as a solution to nearly every problem faced by humanity, beyond just as a means of transferring value. That’s leading people to question whether this entire movement is just a fad, or whether there’s something real to latch onto amidst all of the noise.

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Step back a few years. The world was so interested in blockchain that within a split second, the landscape of digital currencies became saturated with hundreds of alt-coins, created on an almost daily basis and sold off just as fast. These consisted of forks of the original bitcoin implementation, and also new technologies designed to work in a superior way; shipped with a greater variety of on-chain features, more stability, lower fees, and better performance.

Some of these coins have become popular due to the technological benefits they bring; many are popular because of network effects, or investment opportunities. Most are varying degrees of both, with the technical benefits touted as an indicator of investment potential.

Somebody even released a tool to generate your own alt-coin.

Lately, given the saturation of blockchain offerings in the payments space, people have started to suggest all kinds of alternative possibilities and utilities for blockchain tech. What started as a payment mechanism and a store of value, is now being reimagined as a means of powering voting systems, copyright protection, or managing concert ticketing systems.

But let’s take a step back. What is actually new here? What does blockchain bring to the table that has everybody so excited, aside from the opportunity to make (or lose) a quick buck in its extremely volatile markets?

Ownership

In laymen’s terms, blockchain enables proof of ownership. Whether that’s ownership of a coin representing some fungible monetary value, or ownership of some physical property, or of a voting right, or any one of a number of potential use-cases. It all ultimately boils down to:

I own property X

I can transfer property X to person Y

Ownership alone is great, but it isn’t anything new. Banks, governments, and other centralized authorities already act as overseers of “who owns what?” and “how can people transfer what they own?”. That’s a solved problem, right?

Not quite.

Decentralization

Blockchain takes that model of ownership and decentralizes it. It gives the ownership, the power, and the voting rights to everyone, based on a distributed consensus model. That means no single authority can ever lock your funds, repossess what you own, or prevent you from transferring that property to somebody else.

It’s an anarchist model of property — and the irony of that premise hasn’t escaped me.

Privacy

Many blockchain technologies take the above two principles, and add privacy into the mix. That isn’t strictly necessary for blockchain to work; but if you’re trying to develop a decentralized means of transferring value and property, making those transactions private is definitely icing on the cake. Especially to the core market for cryptocurrency; those who truly value trustless, authority-free ownership models.

Given that every blockchain involves publishing every transaction or transfer to a public network to which everyone can be a subscriber, it makes sense to consider how the protection of privacy comes into play. Not only are people interested in hiding their transactions from each-other, they’re also interested in protecting them from governmental authorities and law enforcement.

How does it work?

I won’t dwell too much on the “how” of blockchain. Others have explained it far better than I could attempt to. Suffice to say; the technology behind blockchain is a combination of cryptography, peer to peer networking, consensus systems and public ledgers, all of which add up to a trustless means of proving ownership and transferring value.

It’s smart stuff.

Blockchain as an concept is fairly well battle tested, but the existing implementations aren’t perfect. To varying degrees they’ve suffered from criticisms around power usage and environmental constraints, possibilities of attacks to the network when decentralization is compromised, along with simple unforeseen bugs present in new alt-coins and networks which are being rolled out faster than they can be peer reviewed and tested.

But I don’t want to focus on any of that. Just like with any new kind of software, I see those as fixable problems. I’d like to focus on how usable the tech is for everyday people.

The usability question

The question I’m really interested in is; assuming blockchain actually works, how well does it work for end users? What’s the utility, and can it actually offer more than existing centralized systems? Moreover, will the blockchain revolution be predicated around the core technology, or around the secondary applications of that technology?

A lot of people have compared the rise of blockchain to the rise of the internet; a decentralized network of peers, which went from being totally unheard of, to being a daily part of life in less than a decade.

My question is: did that revolution happen because tcp, http and ssl are a really smart combination of technologies? Or was it because that technology enables so many new and groundbreaking applications? Real time communication, news, commerce, video streaming, trade, multiplayer gaming, and anonymity. These are just some of the secondary reasons the internet took off as an essential part of daily life.

Blockchain is in a similar boat. There are the core enthusiasts; the people who really appreciate the decentralization and privacy aspects beyond all else. Then there’s the second-wave of end users; those who want something to replace what they have already with traditional banking, payments and ownership models, and do it in an easier, cheaper, better way. I think it’s that second group that blockchain developers really have to start thinking about.

So what’s stopping that second-wave of users from really taking advantage of blockchain?

Getting onto the network

If I’m going to attempt to be a fully decentralized user, even getting started in the world of blockchain is painful. Assuming I’ve done my homework and chosen the network I want to join from the thousands of available options, chances are I need to download a desktop client, and sync up with the network, downloading tens of gigabytes of previous transactions before I can publish my own transactions to the network I’ve chosen.

Many blockchain networks have web clients. Some networks even have ‘shallow’ wallets, which trade off the ability for each peer in the network to be able to validate transactions against the entire history of the network, in favor of faster startup and bootstrap times. So there are efforts to make this easier.

But even if I’m acting as a totally independent, decentralized member of the network, chances are the blockchain client I’m using is the same as everyone else. Of course I could compile a wallet from the source code after reading through every line — or even build my own client. In reality though, that path not going to be a feasible even for many technical users. So as an end-user, I’m already at the mercy of whatever the blockchain network developers have included in the binary I’ve downloaded, or the web-client I’m using.

That’s already a high degree of centralization, that people realistically need to buy into without question to be able to easily use blockchain networks.

For users who care less about decentralization, it’s even easier. Log into a fully hosted web experience, like Coinbase, which provides a wallet, use of various blockchain networks with zero effort. Sure, now you’re at the mercy of a centralized authority, and you have no real privacy to speak of — but this is the path of least resistance, and when it comes to adoption, often this kind of convenience trumps everything else.

Buying into the network

Most blockchain networks do not provide a decentralized means of exchange. Solutions are being mooted and tested out for decentralized exchanges, and blockchains like Ethereum allow for ‘smart contracts’ which allow encoding more advanced conditions into the sending and receiving of funds. But by default, many blockchain systems are designed solely around the concepts of ‘ownership’ and ‘transferring ownership’, rather than the concept of ‘trade’.

So immediately there’s a decentralization problem. When you decide to buy into a particular blockchain, without a centralized escrow system or a centralized exchange, you’re at the direct mercy of whoever you’re trading with to fulfill their end of the bargain. So much for ‘trustless’.

If — like many people — you care just as much about ease of entry as you do about the decentralization and privacy of blockchain networks? Then you simply sign up to an exchange you trust, buy some tokens, and move on with your life. Super easy. You lose some of the decentralization, and privacy, of course. But this is already the path most people take.

Sending and Receiving

Okay, so I’m on the network, I bought some tokens, now I actually want to use them to pay for something. That should be easy, right?

From a simple usability standpoint; most cryptocurrencies rely on cryptographically hashed send and receive addresses. I want to be able to send funds to my friend. I know his email address, his facebook name, his mobile number. But to transfer value or property to him through a blockchain network, I need to know his unique identifier on that network, which often looks something like cbbdaa3b-98ec-49a0-be07-a1047571ceb8.

QR codes help a little; but ultimately, either I need to maintain my own address book, or rely on a centralized authority to keep track of who owns which address. Some blockchain networks even provide alias systems, which allow members of the network to link a vanity name to their address to make it easier to send funds to their accounts. But that’s far from being a ubiquitous feature, and often relies on off-chain centralized systems.

Even after figuring out who I’m sending to, as an end user I have to contend with the fact that part of my transfer is taken as a fee, and the transfer may take a decent amount of time, depending on how busy the network is.

That’s not a problem with all blockchain networks. But as recently as December last year, currencies like Bitcoin were facing scalability issues, with huge fees and extremely slow transfer times, leading to a panicked attempt to re-define the network as a store of value rather than a means of transferring value — and to put heavy focus on a new form of lightning network which sidestepped the aforementioned scalability issues. With no shortage of additional potential usability concerns.

Finally, as a user of these networks, I’m largely limited to ‘buyer-present’ style transactions. I agree to pay for goods and services, for which I need to immediately send a payment; once I’ve made the payment, I receive the goods. That system works fine for simple transactions, but let’s say I want to set up a pre-authorization, or a recurring payment, or subscription? Then I’m out of luck, because concepts like that don’t translate well to a trustless blockchain system.

All of the above is not an issue if I’m willing to use a centralized system. Funds can be moved from one account to another in milliseconds, with the actual transfer of value on the blockchain network happening asynchronously in the background. More advanced types of payments like subscriptions can be set up; assuming I’m using a system that I trust enough to manage my funds when I’m not present to authorize each individual payment or transfer.

So centralization is the way forward?

Not quite.

Blockchain is in a position right now where it has already gone a long way to subsuming the roles of centralized authorities like banks or credit card processors. That’s a huge first step, and something which would be extremely difficult to reverse. So at least the core technology is in a unique, decentralized place.

So even though centralized systems are built around blockchain networks, the core technology remains decentralized, the existence of centralized services does not necessarily mean relinquishing control of the network. Centralized systems can simply act as a ‘necessary evil’ — a sugar-coated outer layer for people whose biggest hurdle for blockchain adoption is a better end-user experience and more convenience.

Most importantly; it’s my belief that decentralization is only one of the benefits blockchain brings to the table — and by itself, that decentralization is not even the most pressing need for the second-wave of end-users. For most of the market, there are other greater concerns with making payments and transferring value and property. Those include:

High fees and taxes

Slow fulfillment

Poor usability / high friction

Blockchain can solve the high fees. And it can solve the slow fulfillment. But the usability aspect is where I feel it falls short.

When I helped build out BrainBlocks as a proof-of-concept at the start of this year, it was the core value proposition of the Nano cryptocurrency which really appealed to me. It has zero fees. It has sub-5-second transactions. Its focus is to build on the things that blockchain tech can really excel at; and leave the rest to external developers to build on top of. It does one thing and does it well— but in doing so, in order to become truly usable, it relies on third-party services to be built on top of it, to bridge the gaps.

In building a platform like BrainBlocks, which is intended to be a truly seamless experience for both merchants and customers, the power of a decentralized network, combined with the ease and usability of a centralized system, really goes a long way.

Having a degree control over the wallet, exchange, transfer and fulfillment systems means we can provide the best of both worlds to both merchants and customers who are interested in pursuing the advantages of blockchain, without the difficulty of entry. And being based around a decentralized public network means we can achieve a degree of transparency and trustlessness that wasn’t remotely attainable before the era of blockchain.

To us, finding the right trade-off between decentralization and ease of use seems to be the key to bringing crypto-based payments to the mainstream.

Where do we go from here?

Will blockchain eventually evolve to a point where it can act as a truly decentralized means of ownership and transfer of value that everybody can effortlessly use, including your grandmother?

Perhaps. And honestly, I hope so, because that’s a goal worth pursuing. The technology that results will surely be impressive, in the same league as the web or other great innovations of the digital age.

But until then, I see it as a necessary step to strike a balance between decentralized blockchain networks, and some level of centralized services. If blockchain is going to be of universal application, utility and value, it ought to be usable by everyone.

And the blockchains which succeed, in my view, will be the ones which embrace third party development, ecosystems, and new platforms that extend them beyond their core decentralized promise.

I’m excited to see what people will build.