On March 5-6, artists and hackers came together in London for “Changing the Image of Finance”, an event to demystify money. © Furtherfield Gallery
The Blockchain and its revolutionary promises are currently the subject of heated debate. The director of the MIT Media Lab has published an opinion piece alerting us to the lack of governance regarding the technology born with Bitcoin. Joi Ito gave us permission to republish this text, which tempers the ambient enthusiasm.
In an op-ed on his blog, Joi Ito warns against the revolutionary promises of the Blockchain for banking, insurance, the sharing economy, crowdfunding, etc. In order to avoid any conflict of interest with the Media Lab’s Digital Currency Initiative, the director of the Massachusetts Institute of Technology (MIT) Media Lab publicly distanced himself from the companies involved in Bitcoin and the Blockchain. The same day, he published this opinion piece, which we republish and translate with his kind permission, under a CC by 3.0 license (we added a few hyperlinks to make it easier to understand overall).
“I still believe the Blockchain has the potential to be as disruptive –and unlock as much opportunity and innovation– as the Internet and that it could become a ubiquitous, interoperable, reliable, low-cost network for transactions of various kinds. But along with that enormous potential, the Blockchain also faces challenges that are similar to, but in many ways very different from what we had and continue to have with the Internet and the Open Web.
“I’m worried about the current situation of Bitcoin and the Blockchain.”
“Partially driven by the overinvestment in the space, and partially by the fact that Bitcoin is much more about money than the Internet ever was, it is experiencing a crisis that didn’t really have any parallels in the early days of the Internet. Nonetheless, the formation of the Internet offers some important lessons –most importantly, on the question of the talent and knowledge pool. In those early days, and at some layers maybe even still today, there were only a very small number of people who had the background, brain type and personality to understand some of the core elements that made the Internet work. I remember when there were only a handful of people in the world who really understood Border Gateway Protocol (BGP) and we had to hunt them down and share them with our “competitors” when we were setting up PSINet in Japan.
“It’s very similar today with Bitcoin and the Blockchain. There are a small number of people who understand cryptography, systems, networks and code and are capable of understanding the Bitcoin software code. Most of them are working on Bitcoin, while some are working on Ethereum and other “related” systems and a few more are scattered around the world in other places. It’s a community including some who have been around since the 90s, before the Web, going to crazy conferences like the Financial Cryptography conference. Like any free and open-source software community on the Internet, it’s a bunch of people who know each other and mostly, though not always, respect each other, but which fundamentally holds a near monopoly on talent.
“Unfortunately, the wild growth of Bitcoin and now “the Blockchain” has caught this community off guard from a governance perspective, leaving the core developers of Bitcoin unable to interface effectively with the commercial interests whose businesses depend on scaling the technology. When asked “can you scale this?” They said, “we’ll do the best we can.” That wasn’t good enough for many, especially those who don’t understand the architecture or the nature of what is going on inside of Bitcoin.”
“Many companies that are used to making decisions around less complicated systems –like building a website or buying and running Enterprise Resource Planning systems– felt they could either just hire other engineers who would listen to the customer needs better or became so annoyed with the, “we can’t promise but we’ll try” attitude of the core developers that they lowered their standards and went with whomever would promise to meet their demands.
“The future of Bitcoin, decentralized ledgers and other Blockchain-like projects depends on this community. Many people call them “Bitcoin Core” as if they are some sort of company you can fire or a random set of developers with skills that you can just train others to acquire. They’re not. They’re more like artists, scientists and precision engineers who have built a shared culture and language. To look for another group of people to do what they do would be like asking web designers to launch a space shuttle. You can’t FIRE a community and, statistically speaking, the people working on the Bitcoin ARE the community.
“If you try to build “something like Bitcoin but better!” it will probably turn out insecure, underwhelming, and will go against the the fundamental principles that give Bitcoin the potential to be as impactful to banking, law and society as the Internet has been to media, communication, and commerce.
“Bitcoin is an open project, with a sometimes-inefficient-but-open community process that always pushes for the fundamentals of decentralization, robustness, and innovation. But Bitcoin isn’t a single installation, it’s a living, working system that presents a $6.5Bn bounty for anyone who can break it. This high valuation causes a great deal of caution and testing before anything is deployed on its network, but we can be quite sure that many many people have been thinking about how they can break the system and have so far failed.
“Ethereum and Ripple are probably the two next largest networks in the $100’s of millions range (Ethereum is currently $400M+)—Ripple with a fundamentally different consensus protocol and Ethereum with interesting and useful features. If you can’t do certain transactions or develop certain application on Bitcoin, I can see why Ripple or Ethereum might be interesting. If you’re serious about security and stability—and you should be—Bitcoin is almost the only choice with the largest bounty, and largest community, with the most practical modern experience deploying to a broad and active network in the real world.
“Many people who are so excited about the potential applications that they have ignored completely the architecture of the system on which they would run. Just as many Internet companies assume that the Internet works on its own, they assume that all blockchains are the same and work, but blockchain technology is not as mature as the Internet where you can almost get away with that. They often view the people working on Bitcoin as a bunch of crazy Libertarians who came up with a cool idea but believe that a bunch of hired guns could put the same thing together given enough money. Governments and banks are launching all kind of plans without enough thought going into how they’re actually going to build the secure ledger.
“I fear that we’ll build something that at the application layer looks like what Bitcoin and the Blockchain promised, but under the hood is just the same old transaction system with no interoperability, no distributed system, no trustless networks, no extensibility, no open innovation, nothing except maybe a bit of efficiency increased from new technology.
“We have a good example of that. One of the key benefits of the Internet was that the open protocols allowed innovation and competition at EVERY layer with each layer properly sandwiched between standards developed by the community. This drove costs down and innovation up. By the time we got around to building the mobile web, we lost sight (or control) of our principles and let the mobile operators build the network. That’s why on the fixed-line Internet you don’t worry about data costs, but when you travel over a national border, a “normal” Internet experience on mobile will probably cost more than your rent. Mobile Internet “feels” like the Internet, but it’s an ugly and distorted copy of it with monopoly-like systems at many layers. This is exactly what happens when we let the application layer drag the architecture along in a kludgy and unprincipled way.
“Lastly, but most importantly, we’re burning out those developers who we most need to be focused on the code and the architecture. Many are dropping out or threatening to drop out. Many are completely discouraged and depleted by the public debate. Even if you believe that we will eventually have a new generation of financial cryptographers, you can’t train them without this community. We have many smart people on all sides of this debate and I think that most of them are doing what they are doing with good intentions. However, those of us on the sidelines fanning the flames, making uninformed and provocative statements and fundamentally disrespecting and undervaluing the contribution of the Bitcoin community to the past, present and future of this possibly world-changing innovation, are doing harm.
“I’ve been sitting back quietly hoping that things would just calm down, and they might eventually. But I see more and more misinformation and hype with “Blockchain” being reduced to the same useless suitcase words that “IoT” and “The Cloud” have become and it makes me sad and a bit mad.
“I’ve decided to spend the next chunk of time trying to counteract or balance some of the most misguided stuff that I’m seeing in areas that will have an impact on our future. It feels like while the Bitcoin Core development community is robust, the ecosystem of stakeholders and the understanding of how decisions are made and information is shared is still fragile and vulnerable. I fear that the communication and now emotional rift between various key groups and individuals is wide right now, but I believe it’s imperative that we try to bring the community together and focus on executing on a shared technical plan that represents our best shot at broad consensus from both a technical and a practical perspective. Hopefully, we can build a community and a process that is more robust and can handle the inevitable disagreements in the future in a less emotional and more technical and operational way.”