A leading expert on crypto-currency said we should all temper our expectation for the transformative power of blockchain.
“Why is Blockchain not the solution to all the world’s problems? It’s not magic, would be the first thing I’d say. It is a term that is used as if it is magic,” said Peter Van Valkenburgh, research director at Coin Center, a non-profit research and advocacy group focused on crypto-currency. “You have any kind of political, social, organizational problem that you’re dealing with, and you might think – given some of the early hype around Blockchain technology – that we’ve finally got the solution. You’ve seen any number of use cases touted for this technology, most of which are frankly still speculative. Some of which are really starting to show real returns like digital cash like Bitcoin, which is one of these several Blockchain technologies.
“The other thing I’d say is a blockchain is just a database. It is just ones and zeros. It’s just inert.”
Granted, Valkenburgh was answering this question from Andrew Busch, chief market strategist at the Commodities Futures Trading Commission (CFTC).
Valkenburgh’s appearance on Busch’s podcast continues to provide evidence of the burgeoning industry growing out of crypto-currency. Indeed, Busch noted that the CFTC recently created its own webpage for Bitcoin. Whether it’s exchanges that trade crypto-currency, so-called wallets, or blockchain, it’s now chic to be involved in pushing crypto-currency forward.
Valkenburgh and his group are no exception, and he noted that major power players are involved in Coin Center: “Coin Center got its start in 2014/2015, really 2014. And it began as a kind of a ragtag informal partnership between a guy named Jerry Brito, who is my boss, who is formerly of the Mercatus Center and at the time was just working at the Mercatus Center at George Mason. And an amazing woman named Robin Wiseman who never gets enough credit because she doesn’t ever go on Twitter and talk about things publicly, who was formally in government relations at NASDAQ for the Democrat side and also at the Sternhell Group which is a lobbying group in D.C.
“Both of them had been sort of convinced by some charismatic and humble and generous people in the Bitcoin technology space, like people who most people haven’t even heard of, and I’m not going to embarrass them by actually even mentioning their names on this podcast. But convinced by these people to go around to offices on Capitol Hill and educate people about Bitcoin and pay for that kind of lobbying. Robin is a lobbying expert, she’s incredible; she knows everybody and is so friendly. She wanted to bring an academic expert, Jerry, along.”
Blockchain is the encrypted ledger of transactions which each crypto-currency is able to maintain in real time.
Valkenburgh expanded on blockchain: “So, I think what the innovation is, is actually what I would call the consensus mechanism behind Bitcoin and some of the other follow-on cryptocurrencies.” Valkenburgh added, “It is the three things together when they talk about blockchain technology. The reason why blockchain is just one of those three things but we call it blockchain technology, I think, has a lot to do with branding. Blockchain sounds new and fun and exciting. Consensus mechanism sounds dull and boring like we’re going to be sitting in a poorly lit fluorescent room in MIT discussing it. And the peer-to-peer networking reminds everybody of file sharing, which – depending on how you feel about copyright law – can be a sensitive subject.”