If you talk to a Bitcoiner – or what’s hipper is a blockchainer – you will undoubtedly hear a highly optimistic opinion of the technology behind Bitcoin. And that’s fair enough, as some of the most influential companies in the world entered into a space that not yet a decade old.
There are myriads of ideas thrown around about how the blockchain and Bitcoin can revolutionize how the world operates. Blockchain, it seems, can do anything. If you ask some, its a chaordic system – in the Dee Hock spirit – and if you ask others it can create a new digitized superstructure to prop up the institutions that exist today in the world. Blockchain can literally power finance like oil powers the modern economy.
Yet, despite the scoffing at Bitcoin that takes place among many of the blockchain participants, there is obviously no doubt that Bitcoin remains by far most useful example of how blockchain can be used. You could even say it is, in fact, the only use-case which has succeeded in any meaningful way. This is important. What if nothing else ever comes to be of blockchain technology?
What if in the coming years the term “blockchain fad” fades away and there are merely certain aspects of the blockchain technology incorporated into existing centralized server structures or other innovations from the more traditional sectors of financial technology? In that case, then Bitcoin could arguably remain the sole blockchain technology, and the legions of cyberpunk programmers – looking towards independence, privacy, etc. from nation-states and governments – will indeed have had their day.
Since Bitcoin is currently the only use case for blockchain technology, perhaps it’s a fitting time to ask whether or not Bitcoin is even legal. Indeed, this is a question many have asked. Is Bitcoin legal? It’s a simple question really, but some simply do not believe that Bitcoin is a legal model for the use of blockchain technology for a very simple and oft stated reason: the Bitcoin protocol does not have an anti-money laundering (AML) or know your customer (KYC) regime.
Only those technologies with this layer, it could be argued, are the legal models, and this has been demonstrated with many among the slew of blockchain-inspired projects which market the streamlining of traditional AML and KYC processes through blockchain financial technology.
According to many, this is one of the most exciting prospects for blockchain technology outside the use of bitcoin: the streamlining of back office processes and regulatory practices. So, instead of getting rid of banks, blockchain streamlines them with some of the features of the blockchain. But, and this is important, not all of them. How many of blockchain features does financial technology need in order to be considered blockchain?
The blockchain projects that are coming online today are not always exactly what one might consider true blockchain projects. Many have merely incorporated some of the aspects of blockchain into their financial technology experiments so as to transmit data in new and secure ways or for other reasons.
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Last modified: July 2, 2020 8:21 PM UTC