CNBC Analyst Brian Kelly: Bitcoin Matters More than Blockchain

Brian Kelly, the highly regarded CNBC analyst and CEO of BKCM, a cryptocurrency-focused investment firm, explained in an analytical blog post that as a technology, bitcoin matters more than the blockchain.

Since mid-2015, banks, financial institutions, and technology conglomerates have poured billions of dollars in research and development to commercialize blockchain technology. Enterprise-grade blockchain networks have been introduced, the concept of permissioned ledger was tested, and public blockchain network-inspired projects have been revealed by some of the largest companies in the financial sector.

Yet, to this date, banks and financial institutions are struggling to demonstrate a single successful commercial blockchain technology-based application. The blockchain sector is approaching 2018, and blockchain developers have offered similar statements they had provided in the past few years; that the development phase of blockchain technology is still at its infancy.

Importance of Bitcoin as a Currency

As security expert Andreas Antonopoulos previously explained at the Blockchain Africa Conference held at the Focus Rooms in Johannesburg, South Africa, blockchain technology is one of many technologies that support the Bitcoin protocol. Technologies such as Schnorr signatures, advanced elliptic curve applications and ring signatures. The synergy between these four technologies create bitcoin, a robust, immutable, efficient, and scalable cryptocurrency.

“Blockchain is the technology behind bitcoin. Which is incorrect. Blockchain is one of the four foundational technologies behind bitcoin and it can’t stand alone. But that hasn’t stopped people from trying to sell it. Blockchain is bitcoin with a haircut and a suit you parade in front of your board. It is the ability to deliver sanitized clean comfortable version of blockchain of bitcoin to people who are too terrified of actually disruptive technology,” explained Antonopoulos.

In his blog post published on Forbes, Kelly emphasized that blockchain technology alone cannot operate a decentralized network of nodes, miners, and users because there exists no incentive for any of the participants. Hence, the only viable approach banks can lean towards is the utilization of permissioned ledgers, which have still not been implemented due to their security and centralization issues.

Kelly wrote:

“Without the currency, there would be no incentive for people to spend money on the computers needed to run the Bitcoin software. Blockchain without Bitcoin replicates the same financial system already in existence. There may be some efficiency gains through sharing private distributed ledgers, but blockchain without Bitcoin is not one of the most important innovations in the history of finance.”

Blockchain Cannot Work Without a Native Cryptocurrency

Conclusively, it is not possible to operate a truly decentralized protocol wherein network administrators, intermediaries, and mediators are non-existent without an incentivization system made possible through a native token. All of the successful public blockchain networks represent unique digital assets, such as Ethereum, Litecoin, bitcoin, Monero, Zcash, and Dash.

In order for a blockchain network to function within a distributed ecosystem, it also needs to employ other cryptographic systems and technologies that are required to create a robust encrypted network.

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Andreas Antonopoulos recently spoke about cash and Bitcoin at an event in France. Speaking at the Merkle Conference 2016, he explained that the days of cash is now counted and it is soon going to be extinct. Cash has been one of the most successful peer-to-peer payment options for thousands of years. The same can’t be said about electronic fiat payments as it is more of a “person-to-corporation-to-corporation and then person” transaction.  The corporations being banks, payment processors etc.

Antonopoulos explained the problems faced by small businesses when they receive electronic payments from their customers. Unlike peer-to-peer cash transaction, the electronic payments are subject to realization, which may happen in one day or a week or sometimes a month. In the case of a fraud or other defaults, the business owner may never see the money. Not to mention the transaction fees of anywhere between 0.5% to 2% of the transaction value depending upon the mode of electronic payment.

As the use of cash reduces, people are now at the mercy of banks and payment processing companies. The licensing regime and interference of corporations, governments, and other entities have reduced everyone into a consumer by making it hard for people to take up the role of a producer, thus destroying the communities by disrupting trade within groups of people.

Cash and Bitcoin are push transactions, where the one who is paying does it voluntarily. Comparing it with pull transactions like cards and electronic payments, the individual doesn’t have complete control over his money but the banks, corporations, and governments do. Cash and Bitcoin again are bearer instruments, where the value is assigned to the instrument itself. Cash doesn’t represent the issuance of debt, but transmission of value and it is instantaneous.

Antonopoulos hits back against the backlash currently faced by cash, which is now considered to be the favored mode of transaction for criminals. Referring to Satoshi Nakamoto’s whitepaper on Bitcoin, Andreas points out that Bitcoin is “electronic cash” and not an electronic bank account, a digital credit card or a digital payment network. The digital currency has all the qualities of cash and ideal for peer-to-peer transactions without the interference of third parties.

He reiterates that Bitcoin can be used for everything that cash has been used for until now. In addition, it can also be sent to anyone anywhere which was not possible until now with cash, making everyone the citizens of the world.

The technology that enables people to re-engage with the concept of using money as a form of payment between people and not corporations. With Bitcoin, users don’t have to worry about accounts being closed or their money being loaned out to some war criminal or used to fund those who bomb other countries.

Andreas Antonopoulos ends his speech by relating the core principles behind Bitcoin to the national motto of France – “Liberté, égalité, fraternité”.

Ref: YouTube | Image: Shutterstock


Andreas Antonopoulos recently held a presentation about the relationship between Bitcoin and blockchain. To some people, it is possible to separate the two entirely, but in reality, things are different. In fact, industry experts seem to think Bitcoin will fail, whereas the blockchain will succeed.

It is not fundamentally correct to think either Bitcoin and blockchain will completely succeed, or utterly fail. At its core, both Bitcoin and the blockchain are a revolution in their own rights, and it gives people a lot to think about. Some people dismiss the mere notion of what this concept brings to the table, whereas others seem to be real evangelists.

It all comes down to understanding the nuance of what Bitcoin and blockchain are. A lot of people are pondering these same questions, yet fail to come up with proper answers. Bitcoin is the first blockchain of its kind, but it is also much more than that. It enables innovation without permission, and it is fundamentally neutral.

A Blockchain Without Bitcoin or Proof of Work Will Not Work

There would be no blockchain without Bitcoin, yet the popular cryptocurrency can not work without the blockchain either. Cryptocurrency is fundamentally open, borderless, and censorship-resistant, which makes it very powerful. But at the same time, critics see this as the biggest weaknesses.

Bitcoin never asked for permission to exist, and some experts still feel the concept should not be allowed to exist in the first place. Yet it is here, and it is not going away anytime soon. While the attention has shifted to blockchain as of late, it is not the only cog in the machine that makes Bitcoin tick.

What makes Bitcoin unique is how it uses the open blockchain, connecting the underbanked and unbanked of the world. Rather than requiring significant investments, all these people need to be connected to the internet is a smartphone. There is only one open blockchain that matters, which is Bitcoin. It may not remain the dominant one indefinitely, though, as it is not perfect either.

“Bitcoin can scale to a seven-to-ten billion dollar secure transnational network that has been running for seven years without a successful attack against the core protocol. People have attempted to hack Bitcoin, since day one. It is an attractive target with a US$7bn honeypot, but no one has succeeded in their attempts yet “

Banks are looking to build exciting applications for the blockchain they want to adapt. But having  just a blockchain is not the answer, as there will be a flawed consensus algorithm, There are a lot of questions to be answered when banks claim they “have a blockchain”, but they do not necessarily understand the limitations. A blockchain itself will not take everything people want it to do automatically.

Many financial experts see custom-built blockchains as a solution to ensure everything is tamper-proof. However, that particular trait is guaranteed through proof-of-work, which is not something most private blockchains will use. Immutability, censorship-resistance, and permissionless innovation are only found in the open blockchain, used by cryptocurrency.

Source: Youtube

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To quite some people, the connection between creativity and financial freedom has remained invisible for quite some time now. But Andreas Antonopoulos pointed out how there is a distinct correlation between creativity and what fine-grained components have to offer.

Also read: Blockchain Disruption Will Affect Every Aspect of Daily Life

Andreas Antonopoulos: “Bitcoin Has A Lot of Exciting New Features.”

One of the more prominent very few people are aware of is how Bitcoin will have a hybrid Proof-of-Work and Proof-of-Stake system in the near future. This is a creative decision by the developers very few people had envisioned up until now, and it will effectively turn the entire Bitcoin ecosystem on its head.

A lot of people were shocked when Andreas Antonopoulos made this announcement during a Bitcoin Berlin meetup. The Lightning Network, which is scheduled for launch later this year, is based on proof-of-take. However, it does not operate like people envision this system in the altcoin scene, as the Lightning Network is an entirely different creature.

People have to understand the Lightning Network uses a concept that requires money to be committed to a multisignature address. More money increases the number of transactions to be handled, which will generate new fees. This is a real proof-of-stake system, but it will be based on the Bitcoin network in a trustless manner, and guaranteed by Bitcoin’s proof-of-work.

The consensus algorithms of the future may benefit from proof-of-stake according to Antonopoulos, as this solution would allow for further scalability than the proof-of-work technology is capable of right now. This is just one of the many surprises Bitcoin users can expect in the coming years as creativity is being stimulated by the open source nature of this Bitcoin concept, and its open nature welcomes all kinds of different ideas.

The design of Bitcoin is another area where lots of innovation and creativity will be stimulated over the coming years. But the design of Bitcoin goes well beyond what the users see, as the concept behind cryptocurrency is completely new and different while creating an entirely new ecosystem which can be explained through metaphors linking to existing financial paradigms.

Up until this point, the efforts to explain Bitcoin through design have failed utterly, Antonopoulos stated. Even the name Bitcoin is not helping matters much, as the cryptocurrency is very different from coins, and the term “Bit” is not attracting too many people either. Moreover, the concept of a Bitcoin “wallet” is not helping matters much either, as it does not highlight this disruptive model Bitcoin actually represents.

Exciting times are ahead for the Bitcoin ecosystem in the coming years. Unlike traditional finance, the Bitcoin world will keep on innovating several times per year, whereas the concept of money has only evolved five times within the past two million years. There are many advantages to Bitcoin over the traditional financial world, as people get paid regardless of where they are or what type of work they do. Albeit that may not sound all that appealing to people who have never experienced issues when dealing with international clients, it makes a world of difference for anyone who takes their financial status seriously.

Source: Youtube

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Ethereum, the smart contracts platform with ether as its crypto-token is one the leading cryptocurrency platform. As the platform reaches maturity, Ethereum has gained popularity in the recent days.

The well-known figure in the cryptocurrency world, Andreas Antonopoulos is one of the select people who has known about Ethereum even before it was announced to the world by Vitalik Buterin. He has been a vocal proponent of cryptocurrency technology and has participated in numerous events across the world

Andreas Antonopoulos – What does he have to say about Ethereum?

Andreas Antonopoulos was recently speaking at the Blockchain Meetup Berlin where he fielded questions from the audience. AS expected, there were few questions about Ethereum and its comparison with Bitcoin blockchain. During the session, there were few interesting views about both the blockchain ecosystems exchanged. Unlike the ‘fanboy’ groups that are now out there where members of these bitcoin groups trash the ones who talk about Ethereum and vice versa, Andreas Antonopoulos does justice to both the teams.

The sessions at the Blockchain Meetup Berlin also brought up a very interesting explanation about the difference between Bitcoin and Ethereum with the help of Lego blocks. The concept of smart contracts is already known to most of the cryptocurrency community and Ethereum is specially built as a smart contract platform. However, this doesn’t mean Bitcoin blockchain can’t be used to build smart contracts. It is quite possible to create smart contracts on Bitcoin blockchain too and it is being already utilized by another smart contracts platform – Rootstock.

The degrees of customization offered by both Ethereum and Bitcoin blockchains vary significantly. Ethereum allows a wide range of smart contracts to be created in a much simpler way. Speaking of smart contracts, Ethereum is like a Lego set with lots of bricks of different shapes and sizes. Bitcoin, on the other hand, is a set containing building blocks of a single type. In other words, Ethereum can be used to create smart contracts of different sizes and functions in a more rapid and compact way compared to Bitcoin blockchain with size and speed constraints. But this doesn’t make one seem lesser than the other one. In fact, they both can work together to provide a more comprehensive smart contract solution satisfying the needs of clients, both individual’s and legal entities.

In terms of availability and security, Bitcoin is more limited – 21 million, However, it gets the highest marks for its security standards. Comparing Ethereum with Bitcoin, it has one-sixth of Bitcoin’s market capitalization. However, when it comes to the security aspect, it is about 1/250000th of that of Bitcoin. So depending upon the application they both can work together.

Andreas Antonopoulos expressed his interest in the development of applications that uses both Ethereum and Bitcoin synergistically. His vision is to see other stable cryptocurrencies, satisfying different needs to combine forces with Bitcoin and Ethereum to create a much stronger cryptocurrency and blockchain ecosystem.

Andreas Antonopoulos has a positive outlook towards Bitcoin as well and he is also invested in Ethereum (he has bought ether).

Ref: Blockchain Meetup Berlin - Video

Since the beginning of 2015, an increasing number of banks and financial institutions have focused on the development of unique blockchain networks and distributed ledgers to create “decentralized” transaction and asset settlement systems.

Despite their interest in the blockchain technology, these banks have demonstrated a hostile view toward bitcoin, claiming that bitcoin is not viable as a currency or a medium of exchange.

“Governments like to control (currencies). They have central banks. They like to control the supply. They also generally like to know where it (currency) is and where it goes… They will not support major currencies that go around borders that they don’t have control over. It’s just not going to happen,” said JPMorgan CEO Jamie Dixon.

Established financial organizations and banks participating in blockchain conferences like the R3 conference and leading programs such as blockchain innovation labs are trying to setup blockchain networks which can settle assets and clear transactions cost effectively and securely.

However, these banks are not interested in the decentralized nature of the blockchain technology nor its core purpose. Their interest derives from their stubbornness to admit that bitcoin is in an important and disruptive technology and that they have been wrong all along about its potential.

“Bitcoin is disruptive, and the reason it is disruptive is precisely why it is so difficult to swallow and swaddle in traditional investment terms,” said California-based information security expert and author of Mastering Bitcoin Andreas Antonopoulos.

“As we saw with the Internet, when the first tier of telecommunication companies wanted to control, polish and make the Internet nice and cozy and came up with Integrated Services Digital Network (ISDN) and Compuserve, a few of the third-tier companies who knew they couldn’t compete on that playing field took the Internet and used it as a Trojan Horse to disrupt the entire telecommunication industry.”

So, are there actual banks and financial institutions serious about embracing bitcoin as a currency and as a financial technology? or are all the banks simply riding the blockchain hype train because others are doing so?

The central bank of Barbados is actually considering holding a certain amount of bitcoin as part of its portfolio of foreign reserves. It recognizes the true potential of bitcoin as a reserve currency and respects its growth compared to other major currencies including the US dollar, pound sterling and the Japanese Yen.

“Within recent years, the proportion of digital transactions done using digital currencies has grown significantly. As a result, it is possible that digital currency could become a key currency for settling transactions,” said Winston Moore and Jeremy Stephen, two economists from the Central Bank of Barbados.

PrivatBank, one of Ukraine’s largest banks announced the development of a bitcoin-based merchant payment service solution that would allow online businesses to accept bitcoin with ease. The bank has already submitted an application to the Central Bank of Ukraine for regulatory confirmation and to ensure that their services align with Ukraine’s current financial policies.

The Central Bank of South Korea in collaboration with law enforcement agencies have launched investigations to shut down altcoin-related businesses and cryptocurrency pump and dump schemes because they’re damaging the reputation of bitcoin.

“According to our sources, there are 676 altcoins, including bitcoin, listed on However, only 309 of them have a market cap of USD$10,000, and others are almost worth nothing. Furthermore, there are 550 altcoins that have extremely low daily trading volumes,” said major korean media Chosun.

The central bank of South Korea has been working with bitcoin startups and organizations to regulate the activities of such businesses and help spur the growth of bitcoin in Korea.

It is difficult to speculate exactly when banks will begin to adopt and embrace bitcoin as a currency and as a financial technology. However, it will certainly take a long time before the banks realize that their misguided approach toward the “blockchain technology” have cost them millions of dollars which ultimately led them to a dead end.

Andreas Antonopoulos believes Bitcoin will touch new peaks within the next two years.

While speaking to an audience regarding Bitcoin’s falling value, the celebrated Bitcoin activist stressed that there has been $500 million worth of investment received by this sector during the same bearish year for the bitcoin price.  He particularly pointed out two technologies — multisig and hierarchal deterministic (HD) wallets — that proved their spunk in the real world and brought immense profits for their respective launchers.

“Give us two years,” Antonopoulos stated while predicting same outcomes from the presently  immature Bitcoin technologies. “Now what happens when you throw 500 companies and 10,000 developers at the problem? Give [it] two years and you will see some pretty amazing things in bitcoin.”

He went on speaking about a near-distant future with open decentralized systems, the ingredients of which are innovative and free from any kind of monopoly. “Put that against a closed system,” he added, “controlled by a central provider, whose permission you need in order to innovate and who will only innovate at the exclusion and competition of all of the other companies — and we will crush them.”

From what we could gather, the man simply tried to show Bitcoin enthusiasts a silver lining which, at some point, ended up solidifying as a two-year deadline.

Will Technological Improvements Push Bitcoin Value North?

bitcoin chart

In times when people are still debating on Bitcoin’s true value, there is a very little scope for technology to play a babysitter of a widely awaited bullish rally. The cryptocurrency has undoubtedly escaped from its over-hyped territory but at the same time has turned into a victim of corrupt trading practices. No matter how much we try to avoid it, Bitcoin is still known by its value while its other advantages simply takes the backseat.

As times move forward, Bitcoin will be needed to grow as a whole —  currency, network, technology, etc. Maybe then we can expect a correlation between Bitcoin’s success as a technology and as a value preserver — until then, let’s just wait.

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