Last week I wrote about my new technology adoption model, Huh? Nah! Mmm? Ahh! Shortly after I read an article that helped me move from the Nah! to Mmm? stage in regard to crypto-currencies (BitCoin et al.)
I’ve been fairly dismissive of BitCoin in particular up until now. In fact I remain so. The core of the issue I have with it is that it is solving the wrong problem – we haven’t lost faith in money, we’ve lost faith in financial institutions and a hugely speculated commodity like BitCoin is doing nothing to help.
However, the Business Insider article made me realise that what underpins BitCoin and other crypto-currencies is a thing called a blockchain. The article explains that in detail, but what blockchains enable is for a trusted transaction to happen between two parties in a way that doesn’t require a third party (like a bank) to be involved to broker.
That’s important. For as long as I’ve been involved with the Web, one of the key issues has been about verifying identity online; trusted transactions independent of identity sidestep that challenge.
I’ve no idea what that might lead to; I’m also not certain that it will lead to the replacement of our traditional currencies. Blockchain is terribly complicated, and maybe that will be a barrier to it’s adoption – but then we still (to some extent) trust banks and most people have absolutely no idea how they work. Banks are trading (by their fingernails) on the brands that have built up over hundreds of years, not necessarily on their systems.
The remaining issue I have with blockchain as a concept is that it’s purely technical. And whilst I’m sure it’s as secure as the day is long, mistakes happen as we’ve recently seen with SSL, and at the moment with Internet Explorer. The current financial system is a socio-technical system and as such does have single points of massive failure (we saw in the aftermath of 2008 that governments provide another level of failsafe, although some argue that’s also part of the problem). What remains to be seen is what social structures need and will get built around technical solutions to transactions. The technology alone will not be enough…