Everyone has a different opinion about what makes digital currency important. For some the ability to transfer value between individuals irreversibly and effortlessly is the main feature. Others see profound implications in programmable money, agent-driven transactions, delegated trust, and the ability for software services and systems to integrate seamlessly on a single payment network that binds them together. Underneath all of this functionality is the blockchain, a trust-less distributed ledger that enables new types of applications and services many of which are currently pure speculation.
When people talk about the utility value of Bitcoin they are often referring to the untapped potential of decentralized ledger applications. What they mention less frequently is the network itself. The idea that tens of millions of dollars of hardware is quietly humming along, consuming electricity, and calculating hashes in order to drive the blockchain forward. The fact is that there is an infrastructure deployed world-wide that acts as an engine, and provides substantial benefits for applications running on top of it. It takes literally seconds to fork the code underlying Bitcoin, and doing so would provide any alternate coin with the same technical prowess and capabilities. However, any coin minted this way would be completely separate from the Bitcoin network, and would not benefit from the hashing power which is critically important in protecting the integrity of transactions.
In that light the Bitcoin itself is less of a currency, and more of an access token. Like metered power or water these tokens provide connectivity to the network itself, ink for the ledger. They can be used to transport far more than the coin they represent in the form of assets and alternative protocols. Many of the Bitcoin 2.0 projects are structured on this very idea, the underlying Bitcoin is almost immaterial to the content of the transaction. Baked into the meta-data itself or in the limited opcodes of the Bitcoin protocol is room for exchanges, betting, swaps, contracts, assets, secret messages or any number of uses. This layering of more sophisticated application data turns the Bitcoin network into a transport layer, and makes the Bitcoin itself part of the cost of doing business.
In many ways that makes a lot of sense. We have spent years transitioning monolithic self-hosted infrastructure into the “cloud”. Loosely coupled, API driven components that were meant to be decentralized and scaleable. What has actually happened is that the vast resources necessary to support and develop cloud services has resulted in massive centralization in the hands of a few corporations. What if we had a way of paying the network itself for a universal set of financial APIs and trust-less primitives on which complicated distributed software could be written? Now we can.
The promise of blockchain technology and the network that supports it extends far beyond this initial implementation. Paying or being paid by anyone on the planet is a serious technical achievement, but it is just the tip of the iceberg. A programmable network of trust that allows data to be transferred between parties in a public and irrefutable way is an essential building block for the next wave of network applications. This gives us the tools to link widely-spread resources like compute, storage, and memory while simultaneously having a distributed way of paying for those resources. I’m going to call it Cloud 2.0, it’s all about the network, and you heard it here first.