Bitcoin 2.0 Will Be a Very Big Deal

TechCrunch columnist Jon Evans has written a new article on the emerging “Bitcoin 2.0” phenomenon. He describes “strange, interesting, and wildly ambitious” projects like Zerocash, Ethereum, and Sidechains, and concludes that the next iterations of blockchain technology could be a big deal.

Using the “Bitcoin 2.0” label is sometimes criticized, not least because, strictly speaking, we aren’t even at “Bitcoin 1.0” yet (the current version of Bitcoin Core is 0.9.3). I think the critics are mistaking apples for oranges, because “Bitcoin 2.0” doesn’t refer to a software release but rather (like “Web 2.0”) it refers to new conceptual developments and experimental implementations that significantly extend the flexibility, power, and ultimate utility of the underlying platform.

Evans is dismissive of altcoins (he is hardly the only one). Instead, he identifies the most powerful conceptual breakthroughs. In previous articles, he argued that blockchain technology can fix the Internet and restructure it on a fundamental level:

“The blockchain technology that underlies Bitcoin is a major technical breakthrough that could, in time, revolutionize both the Internet and the financial industry as we know them, and the first steps of that potential revolution are now underway.”

Zerocash, Ethereum and Sidechains

Two Bitcoin 2.0 projects which interest Evans is Ethereum and Zerocash.

While Bitcoin has limited scripting features (by design), Ethereum plans to create a “blockchain operating system” by adding to the blockchain a Turing-complete (TC) programming environment for “smart contracts.” The simplest examples of smart contracts are multiple signatures and escrow transactions. Both are also permitted by Bitcoin scripting, but the Ethereum concept is a more powerful and general-purpose, with possible applications to e-government and Distributed Autonomous Organizations (DAOs).

Zerocash is a new protocol that provides a privacy-preserving version of Bitcoin (or a similar currency). In contrast to Bitcoin’s transactions, payment transactions using the Zerocash protocol do not contain any public information about the payment’s origin, destination, or amount; instead, the correctness of the transaction is demonstrated via the use of a zero-knowledge proof.

In yesterday’s op-ed, I argued that we must protect the Bitcoin underground of anonymous and untraceable transactions, and systems like Zerocash could provide a solid foundation.

Evans observes that, so far, innovation has been slowed down by the need to protect the stability of Bitcoin. But now, with sidechains, we can have the best of both worlds. Rapid and safe innovation can take place in:

“[T]housands of sidechains ‘pegged’ to Bitcoin, all with different characteristics and purposes [and] all of them taking advantage of the scarcity and resilience guaranteed by the main Bitcoin blockchain, which in turn could iterate to implement experimental sidechain features once they have been tried and tested.”

In a recent Reddit AMA, the possibility to implement both Ethereum and Zerocash as sidechains has been discussed and endorsed. Evans says:

“You could take a Bitcoin sidechain and clone Ethereum on it!”

Renowned cryptography expert Adam Back, one of the authors of the sidechains whitepaper, said (with a wink):

“I’m waiting for the zerocash sidechain.”

What do you think? Comment below!

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Last modified: March 4, 2021 4:40 PM

Giulio Prisco: Writer specialized in futurism, science, technology business.