Blockchains without bitcoin? The idea has been swirling around in bitcoin conversations as of late. At the front of the conversation is blockchain consultant Tim Swanson who often injects skepticism into the space. He explained some of the details of permissioned blockchains and how that would work in last week's Epicenter Bitcoin, a podcast dedicated to cryptocurrency developments.
“He's been making people very angry on Reddit,” said Epicenter host Brian Fabian Crain when introducing his guest. And, true to this description, Swanson's name topped the subreddit Sunday in a stab at his take on the blockchain.
Businesses such as Hyperledger, which was recently acquired by Blythe Masters' Digital Asset Holdings, and Eris Industries have brought blockchain software to the table that drops cryptocurrencies. Swanson recently released a white paper in which he describes eight companies working on projects that use the blockchain without the coin. He said in the podcast:
“Let Bitcoin be Bitcoin and not turn it into a million different things that it's not particularly suited for based on its capital expenses that are involved in proof of work.”
But Swanson is not necessarily smugly anti-bitcoin. He described the takeaways in his paper on permissioned blockchains in comparison to bitcoin, explaining:
“There is no one size fits all. They both have tradeoffs. They'll probably both coexist.”
There are areas where bitcoin could potentially work better, but there's also a niche for permissioned ledgers.
Swanson frames permissioned ledgers as better suited for incumbent financial players. “A bank's starting assumptions are different than a cypherpunk's,” Swanson said. In the immediate term the private blockchains, which are controlled by a central entity rather than a decentralized network like Bitcoin, could slash IT costs.
But distributed ledgers—even as the decentralized aspect is stripped away—can provide benefits such as resiliency and the ability to conduct transactions without the worry of counterparty risk.
Crain stepped in to defend Bitcoin. “There's this really ambitious gamble and bet to have this global decentralized cryptocurrency. And it's a long shot. It's a hard thing. But it's a revolutionary, huge idea,” he said. The two Epicenter Bitcoin hosts also mentioned use cases like microtransactions and remittances later in the podcast.
Swanson described the state of the Bitcoin ecosystem, questioning whether it would be able to jump many of the hurdles in its way. He mentioned that the Bitcoin ecosystem has recreated many of the things that Bitcoinites had vowed to destroy:
“Bitcoin has recreated all the problems we've had the past four hundred years with intermediaries, custodians, and with currency itself. And we get to see it in a very compact—six to seven years—form.”
Watch the rest of the episode, which touches on a number of thoughts on the future role of blockchains in more detail.