Reluctance to Use Bitcoin Could Haunt Blockchain Labs – Featured Bitcoin News


Reluctance to Use Bitcoin Could Haunt Blockchain Labs

From Silicon Valley to Wall Street the ‘blockchain’ concept is hyped, but it’s unclear if a reluctance to use bitcoin will be the downfall of distributed ledgers. The World Economic Forum once posited one-tenth of the world’s GDP could be “on blockchain” by 2025. The Cambridge Centre for Alternative Finance conjectures there are 70 blockchain firms out there. Yet, demos have yet to graduate from the lab and join Bitcoin in the real world. 

Also Read: Bitcoin Gains One Million New Wallets Each Quarter

Reluctance to Use Bitcoin

Reluctance to use Bitcoin Could Haunt Blockchain Labs

“About the only common element in the wave of initiatives has been a reluctance to use bitcoin,” details Lionel Laurent for Bloomberg. Meanwhile, blockchain pursuits by multinational corporations and financial institutions have garnered much criticism for being nothing more than “regulator-friendly shared databases.”

In the first half of 2014, as bitcoin consolidated and retraced the steps of its monumental 2013 all-time highs, R3CEV co-founders David Rutter and Todd McDonald were surveying the cryptocurrency space for startups in which to invest. By 2015 Mr. McDonald casually maintained the company’s blog, even mentioning MLB pitcher Bartolo Colon’s first major league home run which has been called “one of the great moments in the history of baseball.”

In its earliest internet mentions, R3CEV doesn’t mention blockchain. “We specialize in advising clients including global banks, interdealer brokers, exchanges, trading systems and more across the globe,” the company explainsR3 currently runs its subsidiary, Liquidity Edge, which offer US Treasury trading over a peer-to-peer market.

Additionally, the blockchain consortium sought to raise $200 million last summer. Sources claimed that a European bank was not happy about R3’s terms, and two other banks were also said to have concerns. Sources say banks dislike their lack of shares in the intellectual property developed by R3 lab, despite contributing resources for the experiments. Banks also reportedly held reservations over how much R3 wished to raise.

Ripple received $55 million in September from major banking partners. CEO Chris Larsen promptly left thereafter, citing a desire to spend more time with family. Ripple has noted to email subscribers it will highlight in 2017 its native digital token, XRP. The Linux Foundation’s Hyperledger, partnered with IBM, continues pursuing distributed ledger solutions and adding new members.

Blockchain Challenges Beyond the Lab

Reluctance to use Bitcoin Could Haunt Blockchain Labs

R3CEV founders say they prefer blockchain agnosticism. In other words, an in-production Bitcoin has no advantage over research-and-development distributed ledgers. ‘No, it’s not bitcoin!’” Mr. Rutter explained to Risk Magazine his thoughts on Bitcoin maximalism. “It’s an innovation inspired by the use of cryptographic maths, but it’s not about trust-less transfer of value – because of course guys, we all trust each other; our market has documentation and legal underpinnings, and we transfer billions of dollars to each other all the time.”

In a 2016 recap, the consortium cited numerous trials throughout the year as reasons for success. R3 executed transactions across a global private network in Microsoft Azure; tested blockchain technologies for fixed income trading; trialed invoice financing and letter of credit (LOC) transactions via smart contracts, as well as Ripple’s XRP in cross-border payments. The New York-based firm also developed a proof-of-concept for a KYC registry.

Blockchain technology, however, might face challenges beyond the lab. Data from across the world shows increasing distrust of the very banks with whom R3 is partnered. The majority of UK’s small businesses ignore these bank’s advice. Millennials distrust banks as well. This could prove beneficial to Bitcoin adoption.

Since it reached its most recent nadir of $197 in 2014, as Mr. Rutter and Mr. McDonald were formulating the modern-look R3CEV, Bitcoin’s price has steadily increased, peaking at more than $1,000 on New Year’s Day. On July 2, 2014, as R3 announced their vision for blockchain development, at the time there were 432 bitcoin transactions per block. On January 22, 2017 there were 1,703. Bitcoin’s hash rate has increased from 111,195 terahashes per second to more than 3 million. And today, according to Google Trends, ‘Bitcoin’ is a much more popular search term than ‘blockchain.’

Bitcoin’s fastest growing markets include Australia, China, Colombia, Indonesia, Japan, Mexico, Malaysia, Mexico, Nigeria, Russia, South Korea and Venezuela. Alongside this, two prominent Bitcoin believers have been associated with U.S. President Donald Trump. Investor Peter Thiel led Mr. Trump’s transition team on matters of science and technology. Bitcoin startup 21 Inc. CEO Balaji Srinivasan is currently being considered to lead the FDA.

Perhaps, ignoring Bitcoin will come back to haunt “blockchain.”

What do you think the growth of Bitcoin’s user base compared to big bank blockchain trials? Let us know in the comments below.

Images Courtesy of Shutterstock, MLB

Tags in this story
Bitcoin, Blockchain, R3, Ripple, Silicon Valley, Wall Street

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Justin Connell

Justin is a writer with the News team.

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