I tried to summarize below few thoughts about blockchain and bitcoin that I made after having gone thought all the FUD that spreads all around this topic which remains fascinating to me even though I consider myself already fallen in the trough of disillusionment. I hope that this first post could inspire some constructive talk with my network.

Blockchain itself is not a disruptive technology, instead Bitcoin electronic cash (or even e-gold) is a disruption since before its invention it wasn’t possible to perform a pure Peer to Peer payment without any intermediaries like it was done by Ukrainian protestors during the crisis in 2014 when banks were closed or with less morally edifying Wannacry ransomware attacks.

Also the use of cryptocurrencies together with automated rules might open to new “disruptive” use cases but those so called “smart contracts” (which are neither smart nor contracts) are complete and make sense only with a “cash leg”, that is an underlying cryptocurrency as input or output of the contract (like ether or bitcoin). So the use of “smart contracts” leads to feasible use cases only after a wide adoption of cryptos or after an adoption of fiat cryptos…

Someone say blockchain is a “foundational” technology like TCP/IP which prepared the ground for higher application levels. Also this second, less bold, statement has still to be proven, if blockchain/bitcoin is like internet in 1993 we have not yet seen events like the IPO of Netscape in 1995. ICO are speculative crowdsale of projects in beta (or even less) phase, cannot compare with an IPO despite they are sometimes very relevant in magnitude.

I would even state that “Blockchain” alone is just marketing, it does not exist! There is no trace of “blockchain” in the original paper where the invention of bitcoin was given to the public by Satoshi Nakamoto almost 10 years ago, instead an hashed chain of blocks together with a well-engineered incentive mechanism that makes all parties involved in a sort of mathematical game being interested to behave well exists and is well described and easy to explain. Maybe is more correct to say that bitcoin is the technology behind blockchain instead of the more popular opposite. Basically I see the problem solved (digital cash) and the solution (blockchain/bitcoin) so connected to each other that cannot be separated, such that it is almost impossible to use the same solution to do something else.

Bitcoin was born as electronic cash but it is becoming more and more something like a digital version of gold. A scarce digital asset not practical for daily payment due to the intrinsic performance limitations of a P2P network but capable of transferring value in time.

I see many relevant players investing fortune into pointless pilots or joining consortia mostly for marketing reasons or due to the fear of missing out. The only way I see those initiatives might end up generating some value could be the fact that companies are pushed outside their “comfort zone” updating their minds, systems and business model: moving towards a worldwide challenge. The final result might be some good idea about new market paradigm or business model but no “blockchain solution” at all. Someone is already talking about “blockchain inspired”, which might not be a bad thing after all...depending what you told to your CEO! :)

Time stamping / notarization look promising as they might enable no-monetary applications on top of existing public networks which guarantee immutability and resilience although there are already many low cost and efficient centralized solutions for that. Instead, before bitcoin, there were no solution for a digital cash, this is why in my opinion crypto currencies are the actual new thing, other use cases are just different way to run application or to manage basic business model.

If you want a pure “trustless” Peer-to-Peer network, which leads to immutability, performances and scalability become huge issues very hard to overcome preserving P2P features. However, you need P2P only if you want to avoid censorship, if this is not a requirement maybe you do not need a real P2P architecture and thus blockchain. In the financial world there are obvious reasons why you might want a payment system which is anonymous and that cannot be censored, do we have this “problem to be solved” also in other field like energy for example? I don’t think so.

Key management and privacy are also huge issues, which very often lead to centralized managers (service providers which you have to trust) which break the original goal of P2P systems without any trusted entity.

There is a huge difference from managing a digital asset, which lives inside a ledger (like bitcoin or any other token, which will never take any physical evidence), and any physical asset like goods or energy which have to stand physical rules, metering, system stability and all sorts of constraints and laws of the easily tamperable/hackable real world. Putting data or hash inside a blockchain does not make it more trusted or verified, that physical asset will always be someone liability in the physical world, so, what is the point of blockchain there? And if you want to save the hash somewhere you can use other traditional tamper proof or tamper-evidence mechanism, so where is the innovation here?

I personally have not seen yet a company proposing together a use case ENABLED by blockchain (I mean something useful, which was not possible before, like digital cash) and a business model for it which is not a fee mechanism (the very same business model of incumbent infrastructure operators which asks fees for managing public infrastructures). I see also an intrinsic contradiction in ventures trying to make business out of “blockchain” or P2P architectures…those startups want to be the new intermediary, which asks service fees after having disrupted traditional incumbent business so I do not see the difference from the incumbent position.

Low transaction fee is a mirage, P2P and the absence of ANY central authority come at a cost, one dollar now in bitcoin network plus seigniorage reward (even P2P file sharing systems require servers for speed reason which in fact are the weak part of the system that every now and then is shut down or "censored", that would be impossible in a real P2P network). Traditional centralized systems can be much cheaper, there are in fact already many so called P2P wallet available for fiat currency which enable money transfer with zero fee.

In a blockchain pilot/project you should merge people coming from business with a clear view of the problem to be solved with people with an OT&IT background. Once that the theoretical overview is clear (and everybody in the team have to do his own homework) the business side remain the hardest one (how to make money out of a P2P, open product/service?).

Asking regulators to “move” or “take action” before having a clear application in mind is nonsense. Regulators will move only when there will be something to regulate (bitcoin ETF for example, etc…) they are not in charge of defining use cases.

Do not underestimate time and effort required to educate people inside your company, bitcoin might still be scary for someone but it is a part of the story that cannot be missed, so start from it even if it takes time to explain. Jumping to abstract “blockchain solutions” without having understood where the innovation happened will lead only in a waste of time and bad reputation for those who have spread the scam.

Probably no blockchain use cases will emerge from the inside of just one corporation, the only possible use cases I can see would outcome from joint, not competitive effort of many actors (maybe competitors of a same market) with a common problem/goal.

Think about the use cases before grouping in consortia and starting develop abstract “blockchain platform”, we are still in a very immature phase from many aspects (technology, mindset, ecosystem…) it is too early to choose one implementation or to stick to one vendor/implementation.

Thanks for your time, I hope these draft notes have inspired some critical thoughts, if you want to share your view, please get in contact with me, I am eager of challenging ideas.