Today, Beppe Grillo‘s blog published an article entitled “Blockchain: why banks and rating agencies are opposed” by Fabrizio Dalle Nogare.
Unfortunately, the article contains some inaccuracies regarding the blockchain.
About Bitcoin, for example, it says:
“Well, we are talking about a blockchain that is neither ‘public’ nor ‘democratic’. Because bitcoins are manufactured in only 4 or 5 places in the world and three of these are in China“.
This part is not entirely clear since it then claims that “This is the “democratic” blockchain: getting rid of banks, intermediaries, the ECB and the single currency, the dollars and the physical currencies“.
Is Bitcoin’s Blockchain democratic?
It must be made clear that the bitcoin blockchain is public: live.blockcypher.com/btc. The very fact that all transactions recorded on the bitcoin blockchain are public is actually one of the founding principles of the decentralized cryptocurrency.
Besides, just above in the article it was correctly stated “that it is not the people that say they own bitcoin but it is bitcoin’s protocol saying it, because it was created with the “consent” of the bitcoin community and the certified algorithms that make its state immutable“: well, this can only be obtained if the blockchain is public.
In fact, without decentralization, this technology would be neither revolutionary nor disruptive.
The second mistake of the article is stating that bitcoins are manufactured: the truth is that nobody can create bitcoins, they can only be extracted during the mining process.
The concept of manufacturing bitcoins is extraneous to the project: there is a computer protocol that releases a certain amount for each validated block and this amount goes to those who can confirm the block.
The third mistake is saying that there are only 4 or 5 places in the world where bitcoins are mined, which is untrure: for example, in the last 7 days more than fifteen pools have managed to mine at least one block and many of these have computing power scattered around the world.
However, it is true that the main miners are Chinese or pools based in China.
At a certain point, the article refers to another unspecified type of blockchain with “millions and millions of nodes” without realizing that it is not credible that there can be blockchain with that amount of nodes.
To date, a blockchain node is an IT system that can not run on a smartphone for example, but it needs powerful machines because it uses a lot of computing resources.
Bitcoin has about ten thousand nodes and is one of the blockchains with the most nodes in the world.
Maybe in the future there will be blockchains that can actually be distributed over millions of nodes, but that’s just a hypothesis.
Another topic is the one faced with these words:
“What then remains of the Central Banks and Governors who, as we see in these days, aim at the government of Western democracies? Nothing more. Zero. Annihilated“.
In reality, the so-called stable coins are demonstrating that blockchains can also be useful for managing the transactions of fiat currencies.
In fact, to date it is rather difficult to imagine that fiat currencies can really disappear and the Central Banks be annihilated, especially if, as suggested by the IMF, they decide to embrace these new technologie as well.
Finally, the article contains a concept that is unclear, that of the “democratic blockchains“.
It can be assumed that it refers to systems based on blockchains managed by the States, that is, in a centralized and not disintermediate way.
It is difficult to make a judgment on this with so little information, but the idea of a blockchain-based system managed by a state in a non decentralized and not disintermediate way, does not seem very revolutionary.
On the contrary, it seems to be just a simple adoption by the States themselves of these technologies designed to be used in a decentralized and disintermediate way.
The curious thing is that the article on Grillo’s blog praises the blockchain as a technology of disintermediation but then seems to suggest a centralized version.
Of course, Beppe Grillo’s blog is not an impartial source, given his involvement in politics, and this article seems to be part of Beppe Grillo’s typical trend in promoting innovation and fighting banks.