In the late 1800s, the telegraph was hot. Poles were being erected like artificial forests, blanketing towns across the United States and the world. Firms blossomed to capitalise on this new, almost magical technology—companies that made the hardware, delivered the messages, maintained the network etc. etc.

Then came the telephone. Over a span of less than ten years the telegraph industry was brought to its knees. Companies foundered, went bankrupt and reinvented themselves to capitalize on the new, new hotness — the spoken word over wires.

This kind of adjustment happens all the time in technological advancement. A new bright industry is born— and then is quickly eclipsed by an even better thing that stands on the shoulders of the first one — crushing it. Examples include Minitel before the Web and even the original mobile phone by smartphones with a GUI.

Is it possible that Bitcoin will fall into this trap? The qualities and benefits of Bitcoin are well documented but it is not without its technical faults. These faults — though seldom publicised in the glowing tech articles— may make Bitcoin ripe for usurpation. Problems include:

Transaction time — it may take up to ten minutes for a transaction to be confirmed. If you want to use Bitcoin to pay for a coffee, the vendor will need to take the risk — or wait ten minutes.

— it may take up to ten minutes for a transaction to be confirmed. If you want to use Bitcoin to pay for a coffee, the vendor will need to take the risk — or wait ten minutes. Scalability — the blockchain ledger has already become so large that it takes several days to download over a reasonably fast connection. This is with a miniscule percentage of the world using the system — if that rate changed to 10% of the 7 billion people people of the workd — scalability will become a serious issue.

— the blockchain ledger has already become so large that it takes several days to download over a reasonably fast connection. This is with a miniscule percentage of the world using the system — if that rate changed to 10% of the 7 billion people people of the workd — scalability will become a serious issue. Concentration — as Charlie Stross notes in his scathing criticism of Bitcoin, the Gini Index for Bitcoin is indeed very bad. Bitcoin wealth is concentrated in rich, urban, educated users — and shows no sign of getting more equitable.

If Bitcoin is the telegrph — an imperfect technology that is enthusiastically embraced but soon to be replaced — what is the telephone?

I’d like to posit a possible candidate

Ethereum: I found the best explanation for Ethereum in a Reddit comment; If Bitcoin is the money of the internet then Ethereum is the internet of money. It takes the distributed ledger and work system of Bitcoin and encapsulates real “Turing complete” programming. Meaning that the distributed computation being done by miners allows for code execution. Ethereum not only has a coin system, “ether” but it also opens the door for developers to create truly secure, distributed programs. Think about a Facebook not controlled by Zuckerberg nor accessible by the NSA — or a new stock market that runs in an autonomous and decentralised manner.

Although Ethereum may inherit many of the same technical issues as Bitcoin — there is also a possibility, with a clean slate, to learn from and fix the problems of the earlier system. Such is the nature of technical disruption.

Two dark horses that are following very similar routes to Ethereum are Bitcloud (still in the white paper stage) and Maidsafe (a for-profit venture that may not appeal to the “’free’ as in ‘freedom’” crowd).

If and when next-generation “ledger-as-software” systems like these take off, it may have a direct impact on Bitcoin. As with all fiat currencies, Bitcoin works when people are interested and use it. Bitcoin may not be the telegraph, but history tells us to be cautious— I can almost hear Bell whispering into a scratchy microphone — “Watson, come here, I need you.”