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In the beginning, there was 'bitcoin', and it was good. But, bitcoin would end up bearing a nomenclature fruit salad that tests mortal comprehension. Perhaps, that is the natural way of things.As a new technology develops, the number of people exposed to that new technology increases, and the language used to describe the new technology evolves.
Initially, the language was limited to bitcoin. Now a person is liable to see any of the following words or phrases that theoretically all mean different things: bitcoin, Bitcoin, block chain, Blockchain, a private blockchain, a public blockchain, distributed ledger technology, distributed asset ledgers, decentralized ledger technology, shared ledgers, et al.
Further confusing the matter, the term bitcoin may not always mean the same thing to different people. What happened? Why the change in language? First, bitcoin has the word 'coin' right in it. This naturally makes people think of currency. Not surprisingly, bitcoin use as a currency is far and away the most successful iteration of bitcoin. The applications for bitcoin are not, however, limited to currency.
This is where much of the confusion arises. Intuitively, the currency implementation for bitcoin (with the word coin in it) makes sense. Trying to convince someone that bitcoin can also be used for purposes as diverse as asset transfers, escrow services, or logistics management is not so straightforward. Bitcoin also suffers from an image problem. The early publicity surrounding bitcoin included scandals, thefts, a euphoria akin to the Tulip bubble, and in general, bad press. 'Fake internet money', as some people called bitcoin, did not inspire confidence amongst the masses.
Additionally, the main advocates for the new technology were unpolished and unproven. Often if someone had heard of bitcoin they had heard of the failed Mt Gox exchange, or they assumed bitcoin was something a person used to buy illicit drugs or hire a hitman. The reality was not that far off. How do you get people to forget about the failed exchanges, drugs, and hitmen? Get them to focus on 'the technology underlying bitcoin', and get them to think about the other potential implementations. Once the conversation moved beyond currency, people started searching for a new word. That search led them to the blockchain.
Negative publicity and conceptual confusion laid the groundwork for people to begin to refer to the blockchain as the real innovation to come out of the bitcoin phenomenon. The blockchain is a chain of transactions that makes bitcoin possible. The term refers to a collection of bitcoin transactions grouped together into blocks and linked through cryptography. This linkage is part of what makes it virtually impossible to fake bitcoin transactions. In a sense, the blockchain provides a decentralized trust and distributed consensus, but the rebranding, or reorienting of people’s attention, to the blockchain and away from bitcoin may be just a clever marketing trick.
Many people argue that you cannot separate the blockchain from bitcoin. The thinking is that you cannot break up bitcoin into its component parts because the parts by themselves will not work the same way independent of each other. In other words, the whole is greater than the sum of its parts. Regardless of whether this is correct, that is precisely what people have done. Once the power of bitcoin became apparent, we started to see article after article touting the 'real innovation' behind bitcoin. Respectable and well-established firms began developing blockchain solutions to their problems.
People consistently discredited bitcoin as boring, while extolling the virtues of the multifaceted blockchain. Large banks, financial exchanges, and the 'Big Four' consultancies all rushed to publish reports on blockchain technology. The hype train that left the station heading to Bitcoinland was diverted to Blockchainville. There are now hundreds of blockchain startups. Problems related to back-end services for large institutions, digital identity, asset transfer, escrow, and logistics, are all being tackled by blockchain solutions. Even tracking pork along a blockchain has been proposed. These companies are doing truly innovative work.
However, to many observers, the term 'blockchain' is still conceptually associated with bitcoin. So, if a company describes an innovation that leverages a type of blockchain they have to distinguish it from bitcoin and the bitcoin blockchain. How do blockchain companies talk about what they are doing without referencing bitcoin, or other blockchains? The solution is to talk about ledgers.
A ledger can record transactions between multiple parties. The ledger concept is the main building block of bitcoin and any blockchain. Ledgers also benefit from the fact that they are commonly thought of as boring, safe, and dependable tools in an accountant’s toolbox, as opposed to the technological innovation that makes bitcoin possible. What better way to put thoughts of bitcoin and blockchain out of people’s minds than insisting that you are only talking about ledger technology? Thus, the conceptual chain to bitcoin was broken.
However, there remains considerable debate over whether this is feasible or even desirable. To early adopters, bitcoin is a monolith that cannot exist without distributed trust, consensus, and immutability, but many new industry entrants view the technology as an a la carte buffet. They are free to decide between many concepts including permission vs permissionless, public vs private, tokenized vs no token, etc.
Today any institution or organization that refers to ledgers is free to discuss bitcoin or blockchain related concepts, without the supposed taint of bitcoin. Even the Federal Reserve Board (of Federal Reserve Bank fame), has touted ledgers in their recent report on “Distributed Ledger Technology.” Over the past two years, hundreds of new blockchains and ledgers have been created. They all draw on the root concepts of bitcoin, but their purposes and the lingo used to describe them have diverged widely. This conceptual repackaging and public relations approved language replacement is likely to continue for some time.
This story has gone from bitcoin to blockchain to distributed ledger technology. There are companies that operate in all of these spaces or only one of them. Outside observers are forgiven if they struggle to keep up with all the different terms. Yet, through all of this evolution and upheaval, bitcoin has remained central to the discussion. Whether bitcoin, the blockchain, and distributed ledgers will be adopted and thrive or consigned to the ash heap of history remains to be seen.
The fact that bitcoin has undergone repeated repackaging is a testament to the strength of the technology. Other blockchains or related technologies may rise and fall, but bitcoin’s inertia and first-mover advantage will continue to make it the most relevant cryptocurrency, blockchain, and ledger.
Chuck Reynolds
Contributor
