by Fran Strajner, Co-Founder @ BraveNewCoin
By now everybody has heard of Bitcoin, and to some extent 'The Blockchain' technology which birthed it.
Every major bank and financial institution is, at the very least, 'keeping an eye' on the nascent technology. Others, including Visa, Barclay's, UBS, and now dozens more institutions, are putting millions of dollars to work in this space. Some of the incumbent finance giants openly admit they would rather cannibalize themselves than be cannibalized, and are placing bets on the evolution of this new technology.
One major milestone that the industry is inevitably reaching towards is the collision of standards and protocols.
We have heard much talk of 'Private Blockchains' and 'Permission Ledgers,' a move that started around 9 months ago. This trend has been driven by earlier experimentation from banks, which quickly evolved into a 'Bitcoin Bad,Blockchain Good' echo-chamber throughout the high-finance world.
This is now evolving again, to a sentiment that is more in line with 'Industry Specific Chains.'
We are now seeing the general notion of 'Private Blockchains' relabeled as, 'IndustryBlockchains.' Which is reminiscent of 'Global Warming' becoming 'Climate Change.'
Bitcoin and it's original Blockchain are the secured by the biggest computer network in the world today, with more processing power than all supercomputers combined. It is a difficult force to be made obsolete, but we'll refrain from saying 'Too Big to Fail.'
Some say that only something fundamentally better could rail road bitcoin's momentum. High-Finance is only going to leverage this situation, and build custom solutions that work with current risk and compliance models.
What we are seeing now is the inevitable shakeout and showdown of standards and protocols.
To truly see how the Blockchain is evolving, we only need to look at recent history. Think back to how the internet itself evolved.
The Internet that could have been:
A plan, devised 37 years ago, would have created a comprehensive set of standards for computer networks called 'Open Systems Interconnection', or OSI.
The architects were a dedicated group of computer industry representatives from the United States, France, and the United Kingdom. They envisioned a complete, open, and multi-layered system that would allow users all over the world to exchange data easily. The system was going to unleash new possibilities for collaboration and commerce.
For a time, their vision seemed like the right one. Thousands of engineers and policy-makers around the world became involved in the effort to establish OSI standards. They soon had the support of everyone who mattered; computer companies, telephone companies, regulators, national governments, international standards setting agencies, academic researchers, and even the U.S. Department of Defence. By the mid-1980s the worldwide adoption of OSI appeared inevitable.
And yet, by the early 1990s, the project had all but stalled in the face of a cheap and agile, if less comprehensive, alternative; the Internet’s Transmission Control Protocol and Internet Protocol. As OSI faltered, one of the Internet’s chief advocates, Einar Stefferud, gleefully pronounced: “OSI is a beautiful dream, and TCP/IP is living it!”
What happened to the “beautiful dream?” While the Internet’s triumphant story has been well documented by its designers and the historians they have worked with, OSI has been forgotten by all but a handful of veterans of the Internet standards wars.
Blockchain Protocol Wars?
The above puzzle (title picture up top) was originally authored by Pantera Capital. It depicts Bitcoin as the missing piece in the Internet Jigsaw. Over the coming months and years, we will see an entirely new jigsaw, made up of pieces representing several Blockchain Protocol Standards. This will be the 'Internet Of Value' jigsaw. Don't worry - we're working on an infographic.
These pieces will represent standards in how the Blockchain is used for:
- Documentation Notarization
- Asset Exchange and Settlements
- Storage and Access
- Smart Contracts
The main 4 groups working on various standards are:
- Ripple Labs,
- Digital Asset Holdings / Hyperledger,
- and R3 CEV (who now have 22 banks supporting their mission)
What we are seeing now mirrors the rise of the Internet. Microsoft wanted a private internet, Oracle wanted their own version and protocol standards.
We believe it is too early to tell exactly how things will pan out, but can reflect back to the internet days and take away the following insights:
- Standards/Protocols are inevitable and required.
- Networks ALWAYS end up demanding inter-operability.
It took 15 years to shake out the ideas and protocols that solidify the internet we use today. It will take at least 5-7 years for Distributed Ledger Technology to be implemented commercially on a global scale by enterprise, i.e. using some form ofblockchain to replace the SWIFT network, or back-end infrastructure for inter-bank or even inter-branch settlements.
We expect to see proposals rise and fall and flip-flop as solutions and standards evolve, so don't count on anything proposed today becoming the de facto operating standard.
Whatever happens, we know one thing for sure; Millions will be spent, burned, made, and the world will only remember the victors.