Everything you need to know about…

Blockchain and Bitcoin; but we’re afraid to ask 


There is a superb summary of the ins and outs of Blockchain penned by Nourial Roubini in the Guardian– its key thesis is that overpriced cryptocurrencies owe their diminishing credibility to an over-hyped technology.

One of the promises of blockchain technology is that it could cut out large amounts of paperwork. For example, a contract between two or three parties could be executed on the blockchain. Instead of numerous paper copies being updated with the latest terms, a single document, which tracks all the changes made by different parties, would be possible. The contract would be executed once all parties had met certain conditions. This is one of the use cases touted by Ethereum, which has a corresponding cryptocurrency called ether.
Roubini said that many people are confusing what it means to run a blockchain application.
“For starters, blockchains are less efficient than existing databases. When someone says they are running something ‘on a blockchain,’ what they usually mean is that they are running one instance of a software application that is replicated across many other devices.”
Not a ‘new universal protocol’

Because blockchains require all transactions to be verified cryptographically, they are often slower than traditional processes.
Roubini also said it’s unlikely that blockchain technology would be able to eliminate financial intermediaries, as many have claimed. Advocates of the technology have said that the decentralized nature of the way transactions are verified could wipe out people in the middle of the movement of money, something Roubini disagrees with.
“This is absurd for a simple reason: Every financial contract in existence today can either be modified or deliberately breached by the participating parties. Automating away these possibilities with rigid ‘trustless’ terms is commercially non-viable, not least because it would require all financial agreements to be cash collateralized at 100 percent, which is insane from a cost-of-capital perspective,” Roubini said.

Read the Guardian as it’s thorough and readable