The industry is abuzz with the new poster child of ‘disruptive’ innovation, Permissioned Ledgers. I spent quite a bit of time earlier in the year consulting for big name firms on bitcoin blockchain and permissioned ledgers. At the time I didn’t really view one preferably over the other, I considered each on its merits and useful applications. Of course when you are paid to technically consult for a company, they don’t want your biases, they want your technical expertise. Without fail, those of them who were interested in B2B models were interested more in a permissioned ledger, and those who were doing B2C models were interested in using Bitcoin to monetize their online business models. Most that were interested in B2B solutions had very bank-like businesses dealing with near-money like value systems. Decentralized ledgers are great as payment systems. Bitcoin is digital money, that runs on a decentralized ledger. Notice the difference? The ledger part is just a small part of Bitcoin’s innovation which is the money aspect. Because it is a money it is natural that banks or bank-like entities would want to steer clear of Bitcoin. There are very strict laws surrounding the control of who gets to print money, what is legal tender, currency control laws, and Bitcoin turns all of that on it’s head.
When I used to compare the two for my clients I would tell them that Bitcoin was harder to create a business model on top of due to the yet unclear legal issues while with permissioned ledgers I saw a clear potential for profit in developing cost saving systems. I was quite impartial to this difference until only 6 months ago, seeing both as equally beneficial as a technology. However, something happened in the interim that changed my views — Greece. With the Greek crisis, the world witnessed how the will of the common people matters little against the will of the privileged few. Many would like to blame the Germans but that would be unfair. The german economy suffers with continued bailouts as well; “throwing in good money after the bad” those of us in the industry call it. The central banking system is to blame, as whether deliberately or by greed or by chance, the world economy is starting to collectively crumble under the weight of our bad habits of spending, lending and investing with debt. And we witnessed first hand that when the chips are down, it will be everyman for themselves. Bail-in clauses have been put in place in all major countries of the world, so that the banks have a right to take your money to save themselves before you. They justify this as necessary to save the system as a whole. But is it really?