Even if you haven’t paid attention to the cryptocurrency space, it seems evident that the Ethereum community is at a crossroads, much like Bitcoin still finds itself over a hard-coded block size. I’ve occasionally tweeted about the Bitcoin community’s inability to move past a simple traffic jam when much greater challenges lie ahead of the blockchain industry. Since jumping into Bitcoin full feet with my purchase of a Butterfly Labs Jalapeño on New Year’s Day 2013, I’ve dreamed of a better world, enabled by blockchains. Though specialized equipment is now required to compete as a “miner”, this participatory dream is alive and well with the very popular 21 Bitcoin Computer.

Having previously spent time working on Hive (a Bitcoin wallet) and helped further the idea of Blockchain-enabled “Dapps”, I’ve always held a long view of blockchain technology in general. Like some readers, I grew up in an age before the internet. Around 1994, I published my first webpage on Geocities, and I’ve been maintaining servers pretty much ever since. My view of decentralization is a more connected world that magically scales and has no downtime. It’s a world envisioned by Sir Tim Berners-Lee and other early internet pioneers.

Except today, the web is predominantly controlled by massive corporations. In many ways, the components that would allow for a “better” internet crystallized when we started realizing that trust could be offloaded to a protocol governed by no one in particular. At this point, money on the internet is possible and HTTP 402 “Payment Required” meets implementation. Micro-transactions for content as an alternative to ads? Brilliant!

The truth about blockchains

One of the fundamentally interesting things about these system is the touted “immutability” aspects. This is true to a point, but ultimately humans pushing buttons control the machines, and these systems inherit human reality, however constrained it may be. One of the very decisions the come into play is what software to run, and what its particular settings are—this is an important area that Bitcoin and Ethereum transaction validators (“miners”) play a large role in the network.

Currently, there are a handful of large mining pools controlling non-insignificant portions of the respective crypto networks. Although this is less than an ideal situation for decentralization, hopefully this won’t be much of a problem given the fact that many of these pools compete viciously and will come and go over time. Ultimately, what’s important is that the underlying Bitcoin and Ethereum protocols live another day. In a centralized model, this is often not the case—sometimes due to failure, other times due to subpoenas, and others through mergers and acquisitions.

In the end, we cannot rely on institutions with differing motives to remain neutral on the war fer internet resources. Though there are a myriad of file sync services like Dropbox, does anyone really truly trust that they are secure from spyings and hacks? One solution is for people to store sensitive documents in extra encryption layers before putting in “the cloud”, but we shouldn’t have to—or at least we shouldn’t have to think about it.

Piecing it together

Do blockchains solve this problem? Not directly, but they enable a wide variety of machine-to-machine solutions when it comes to securely storing and retrieving data of all manners. So-called “smart contracts” are the perfect solution to the problem of paying someone to redundantly retain data for you. This goes beyond simple ledger adjudication when coupled with complementary technology, like Radien. Payment-channels allow for privacy and some sense of scalability when settlement is not yet required, a purpose the blockchain excels at.

Of course, this could not exist without some sort of internet money, to which blockchains are very well-suited. And while the underlying token is necessary to the security of the network, it needn’t be the only value-transmission mechanism. Collateralized assets spendable as programmable money on the blockchain is an interesting approach. Organizations like Maker are working towards solutions already.

What we’re talking about here is an improved version of killer apps like OpenBazaar, a decentralized eBay. It’s fine that goods can be priced in the protocol token, but the seller should be able to list the item in their preferred unit (for example, grams of gold). Your digital wallet could seek an appropriate conversion offer to convert your local currency token to their preferred one. This can all happen behind the scenes, seeking the best price instantaneously and automatically.

And while I’d like all of this functionality to exist today, we’re simply not there yet. The good news is that blockchains already have excellent use cases in areas that require high transparency, such as governments and nonprofits. Organizations of all types will benefit from the first wave of applications supporting accounting, governance, and process efficiency solutions. These can have a meaningful impact in reducing costs while fimly ensuring all the data remains fully under your own control.

The long tail of blockchains

Blockchain purists may extol the first and “only” use of blockchain as money, but this is an obvious bluff. The dream of blockchains’ full ability has been alive for at least as long as Vitalik Buterin wrote his famed white paper. That vision lives on today, albeit inside the Ethereum community. As unfortunate as it is, the Bitcoin community has so far not demonstrated willingness to make large changes and at some point this becomes limiting with respect to decentralizing technology at large.

Take the case of Lightning, Bitcoin’s own version of state-channels. Bitcoin Core developer Peter Todd recently mentioned “There’s only so much data that can go through the bitcoin network and if we had a large number of Lightning channels get closed out very rapidly, how are we going to get them all confirmed? At some point, you run out of capacity.” Bitcoin’s 1MB block size cap could become the bottleneck when the extra layer of scalability breaks down. If not addressed, it could result in a crushingly large volume of transactions instantly flooding the network seeking settlement.

And despite the fact that I’m no longer explaining the unique qualities of cryptocurrency and dominance of a single global currency, I find that friends and family who where disinterested in such things have expressed enthusiasm when the idea of blockchains turns to “owning your own data”. These aspects of transparency and audibility appeal to the vast majority of non-technical potential users in a large variety of use cases. Users are tired of having their data leaked by third-parties and this may be a unique opportunity to explore new solutions using modern cryptography, which blockchains are based on on.

Even if you hold no position in any of the debates, there are still usability rough edges which keep the bar high for the “average user”. Innovation in incentivized consensus protocols themselves play a role, as do related technologies. In general, the growth of “blockchain” as a concept of global consciousness means good things for privacy, security, and disintermediation, so technology professionals should be looking for opportunities to apply blockchains anywhere trust is in involved.

A fork ahead

While an important decision lies before the blockchain ecosystems with regard to forks and philosophy in general, it’s important to remember that what’s best for open source has evolved through the use of forks. Though often ripe with controversy, forks represent the ability of a technology to change and grow over time. They can add news features or fix a problem, such as denial-of-service vector—the original reason for implementing a block size cap in Bitcoin.

Ethereum has already forked during its short existence, when enabling new rules in the upgrade from Frontier to Homestead. Is this some sort of scar in the history of the chain or is it proof that we’ve learned something through experience? These decision points represent a growing opportunity, and it’s up to us, the individuals that make up these ecosystems, to adopt the right approach towards change. Time is the ultimate finite resource and we cannot wait to make a decision forever.

Meanwhile, “Bitcoin backlog” appears to be the new norm as transaction demand has outstripped the artificial supply cap. Although there have been vocal communities speaking out against this, the true power lies with the miners, primarily located in China. It’s rumored that these miners may finally be fed up with the situation and could be banding together to implement a doubling of the size cap, to 2MB, which becomes ever important for a post-halving Bitcoin.

Survival of the fittest

Although I do believe in the philosophical power of immutability, we have to reconcile that in the non-blockchain world, there is another reality that does not care about perfect immutability and is swayed by ephemeral public opinion. It is this ability to mold the environment around us that has helped humanity to expand at an exponential pace.

The fact that global discussions are occurring and could result in a fork of any chain cements the event in the history of the internet. A blemish in the code for patch or upgrade only further reflects the reality that human discussion happened and we exercised positive control over the machine known as “blockchain”.

Since we’ve done this before and we expect to do it again, we should embrace the opportunity to continue growing. Although changes to production system should not be taken lightly, the ultimate disaster scenario is when there is a critical problem with the system and you cannot upgrade or fix it. We can’t completely avoid a crisis, but we can prepare for them and let experience be our guide. Although I don’t yet believe blockchains are in crisis mode, failing to act could very well put us into an emergency situation, while the world watches and waits.