Welcome!

Related Topics: @CloudExpo, Open Source Cloud, Cloud Security

@CloudExpo: Blog Feed Post

Is Blockchain the Ultimate Open Source Disruptive Technology? | @CloudExpo #Cloud #FinTech #Blockchain

The goal of the blockchain is to allow anonymous and secure record-keeping

Is Blockchain the Ultimate Open Source Disruptive Technology?

Fred Wilson of Union Square Ventures has been talking a lot about the blockchain recently, so I decided to learn more about it.  I read the Marketing the Blockchain e-book, watched The Grand Vision of a Crypto-Tech Economy video and the video keynote of Overstock CEO Patrick Byrne at the Bitcoin 2014 conference, and did some more research on my own.  While far from an expert, I do see some interesting similarities to the adoption of open source software. Here’s what I’ve learned — please comment and tell me if I’m wrong:

What’s the Big Deal about the Blockchain?
Blockchain is a distributed ledger system using crytography and open source software. The goal of the blockchain is to allow anonymous and secure record-keeping. But here’s the big thing: instead of those records being kept in one central, allegedly secure place, it is kept distributed in a peer to peer way, while also being (allegedly?) secure.

Okay, that’s nice.  So what?

Now stop for a moment.  Think about this: What does every institution in our society do?

What does your bank do?

What does the Federal Reserve, European Central Bank, Bank of England, or any other central bank do?

What does your local registrar/recorder do?

What do eBay, etsy, Paypal, uber, airbnb, Facebook, Amazon, Yelp do?

What does every business, big or small, do?

They all keep records in a central, allegedly secure, place.

So what if there was a technology (open source no less!) that could replace every single centrally kept source of information with a peer-to-peer distributed alternative?

The internet is a big deal because it fundamentally replaced centralized information repositories such as newspapers, TV, and encyclopedias with distributed, peer-to-peer alternatives.  If the blockchain could replace all these other parts of our society, right down to our monetary and banking systems, wouldn’t it be a 10x, 100x, 1000x more powerful force for change than the internet?

IF.

Could it Really Happen?
Blockchain enthusiasts would tell you that it is already happening: Openbazaar is out to replace eBay, Amazon, and etsy. Steemit is out to replace reddit, twitter, and Facebook.  And then, there’s bitcoin, out to replace your money with a digital currency outside the control of any government!  Not only is it accepted at Overstock now, but there’s actually an impressive list of places that take bitcoin for payment, including Expedia, Microsoft, Whole Foods, Dell, Home Depot, and Sears.

But here’s the catch: These places are accepting bitcoin based on its spot exchange rate to mainstream currencies.  For example, when you checkout at Overstock, your shopping cart is quoted in dollars, and then Coinbase will quote you a bitcoin price based on the current bitcoin/dollar exchange rate.  This bitcoin price is good only for a short period of time (10 minutes from when I tried it.)

So in reality, “accepting bitcoin” today is like accepting the Discover card.  It’s certainly a necessary step if bitcoin is to go mainstream, but it doesn’t mean that bitcoin is replacing established currencies.  For that to happen, we’d actually have to see an economy that’s priced in bitcoins.  This means a group of people must be willing to take a relatively fixed amount of bitcoins for their goods or services, instead of pricing them in dollars, euros, or another established currency.  Usually, that means other people must be willing to take their bitcoins in turn.

For example, you might bill $100 per hour for your services. You probably wouldn’t change that rate as the dollar fluctuates from $1.05 to $1.2, $1.3, or even $1.6 to the euro. Would you similarly accept 0.1 bitcoins instead of $100 per hour, whether 1 bitcoin was worth $700, $1,000, or $1,300?  That depends on what you can do with it, doesn’t it?  If you live in the United States and pay rent, buy groceries, and go to restaurants and movies with dollars, it won’t matter to you what the dollar to euro exchange rate was, because all your expenses are still (more or less) the same in dollars.  Similarly, until you could buy all sorts of stuff at relatively stable bitcoin prices, you’re taking quite a risk fixing your price in bitcoins.

Hence we have the classic adoption problem for new technologies: Until we get a large group of people to adopt it, most people wouldn’t want to adopt it.

Lessons from the Quiet Revolution
Most blockchain advocates deeply believe that a de-centralized economy is a fundamental virtue, but they also realize that the rest of the world won’t care. They know that for the blockchain to take off, it must be an invisible part of the apps that power regular people’s lives.

Which sounds just like open source software: Most open source developers believe that software freedom is fundamentally good, and software copyrights and patents are fundamentally evil. Richard Stallman’s The GNU Manifesto could practically be translated into a manifesto for blockchain just by changing some words.  Yet that’s not what drove the adoption of open source software in the end.  We did not, as a society, all rise up to overthrow the shackles of commercial software.  Instead, open source is a quiet revolution: When you open your smartphone, check some reviews, surf the web, play a game, or buy something online, you’ve probably used at least a dozen different open source technologies.  But most people don’t even know what “open source” means (although it sounds nice.)

What drove this quiet revolution?  In retrospect, open source software has been most successful when three conditions are met:

  1. The market space has no dominant commercial incumbent.
  2. The market space was not deemed mission critical.
  3. Open source was the easiest, lowest friction option available.

For example, Linux, Apache (actually just the httpd web server), MySQL, and PHP (aka “LAMP”) were all successful because they were used for building web-based applications in the early 2000’s.  Commercial alternatives like Solaris, Microsoft IIS, Oracle, and ASP .NET were not dominant the way Microsoft Windows and Office or SAP were.  Funnily enough, back then websites weren’t considered mission critical by most companies, so it wasn’t a big deal to let the geeks try out some new technologies.  And it was much easier for those geeks to download and install LAMP and start making a website than go through the long procurement process with Oracle, Sun, or Microsoft.  So open source took off.

What Don’t You Like About Establishment?
Contrast this with the blockchain today, and we see that in all the niches we’ve talked about, there is a dominant player: Our currencies and banks, major corporations, and social networks are very much established.  Furthermore, they are very much mission-critical.  We get paid with dollars and know that we can pay our rent or buy groceries.  We put it in the bank and trust it’ll be there tomorrow, and we don’t have to worry about losing all our money if our hard drive crashed and we lost our bitcoin keys.  We trust the reviews on Amazon and eBay and know that when we buy something, the goods would get to us.  We trust that uber will send us a driver who is not going to hijack us, and the driver trusts that uber will pay them for our trip.

We may not like everything about them, but how many people are ready for a peer-to-peer, de-centralized alternative?  And if anything went wrong with that alternative, “who would I sue?”

So can we find some non-mission-critical applications where there are no dominant incumbents?

We might think that blockchain is a natural fit for places that fall outside the established monetary and banking system, for example in countries with failing currencies.  But the dominant incumbent currency in those countries is usually the US dollar: there are apparently more dollar bills in circulation outside the United States than inside for that very reason.

We might think that technologically, the blockchain is a natural fit for peer-to-peer transactions, like eBay or uber.  But those are very mission-critical applications.  There are plenty of eBay sellers whose livelihood depends on getting paid and getting good reviews.  They’ve learned how to get those through eBay and Paypal.  Would they trust that livelihood to someone else easily?  As for uber, it’s the driver’s livelihood and the rider’s life that are literally at stake.

One interesting blockchain application is micro-payments.  Today’s payment networks, such as Paypal and credit cards, have a minimum threshold below which the costs are just too great.  It’s not worth it to send someone $0.05 electronically, but it is with blockchain.  So can we have an economy where blockchain is used to transact in such small amounts?  Perhaps.  But who would want to exchange such small amounts?  I don’t know.  You might.

Last but not least, there’s health care.  Here’s a great one: Our health care system is antiquated.  Records are not even kept electronically.  We don’t trust our doctors, hospitals, and especially insurance companies and government health departments.  There is no dominant incumbent.  Wouldn’t it be great to be able to keep all my health records in the blockchain, so I can share them with doctors and insurers and even other physicians at my choice?

But what if something happened to my health records?  What if they got stolen, tampered with, or simply lost forever?  It could be life or death.  Talk about mission critical.  So would most people trust Google or a peer-to-peer distributed ledger?

As you can see, I haven’t figured out a break out application for blockchain.  But then again, like I said at the beginning, I’m far from an expert–not even much of a beginner in fact.  If you think of something, please let me know in the comments.

Read the original blog entry...

More Stories By Si Chen

Si Chen is the founder of Open Source Strategies, Inc. and Project Manager for opentaps Open Source ERP + CRM (www.opentaps.org).

Latest Stories
"We are an IT services solution provider and we sell software to support those solutions. Our focus and key areas are around security, enterprise monitoring, and continuous delivery optimization," noted John Balsavage, President of A&I Solutions, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
There is a huge demand for responsive, real-time mobile and web experiences, but current architectural patterns do not easily accommodate applications that respond to events in real time. Common solutions using message queues or HTTP long-polling quickly lead to resiliency, scalability and development velocity challenges. In his session at 21st Cloud Expo, Ryland Degnan, a Senior Software Engineer on the Netflix Edge Platform team, will discuss how by leveraging a reactive stream-based protocol,...
SYS-CON Events announced today that Calligo, an innovative cloud service provider offering mid-sized companies the highest levels of data privacy and security, has been named "Bronze Sponsor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Calligo offers unparalleled application performance guarantees, commercial flexibility and a personalised support service from its globally located cloud plat...
As enterprise cloud becomes the norm, businesses and government programs must address compounded regulatory compliance related to data privacy and information protection. The most recent, Controlled Unclassified Information and the EU’s GDPR have board level implications and companies still struggle with demonstrating due diligence. Developers and DevOps leaders, as part of the pre-planning process and the associated supply chain, could benefit from updating their code libraries and design by in...
"Peak 10 is a hybrid infrastructure provider across the nation. We are in the thick of things when it comes to hybrid IT," explained Michael Fuhrman, Chief Technology Officer at Peak 10, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We were founded in 2003 and the way we were founded was about good backup and good disaster recovery for our clients, and for the last 20 years we've been pretty consistent with that," noted Marc Malafronte, Territory Manager at StorageCraft, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
DevOps at Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to w...
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
"The Striim platform is a full end-to-end streaming integration and analytics platform that is middleware that covers a lot of different use cases," explained Steve Wilkes, Founder and CTO at Striim, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We are focused on SAP running in the clouds, to make this super easy because we believe in the tremendous value of those powerful worlds - SAP and the cloud," explained Frank Stienhans, CTO of Ocean9, Inc., in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We are still a relatively small software house and we are focusing on certain industries like FinTech, med tech, energy and utilities. We help our customers with their digital transformation," noted Piotr Stawinski, Founder and CEO of EARP Integration, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"At the keynote this morning we spoke about the value proposition of Nutanix, of having a DevOps culture and a mindset, and the business outcomes of achieving agility and scale, which everybody here is trying to accomplish," noted Mark Lavi, DevOps Solution Architect at Nutanix, in this SYS-CON.tv interview at @DevOpsSummit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"DivvyCloud as a company set out to help customers automate solutions to the most common cloud problems," noted Jeremy Snyder, VP of Business Development at DivvyCloud, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
DX World EXPO, LLC., a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
21st International Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Me...