A review of the new TechCrunch video series “Trust Disrupted: Bitcoin and the Blockchain”
- As much as I wanted to mock the new YouTube series, I really liked it.
- The viewer is taken from meetups in Moscow to Bitcoin mining facilities in undisclosed locations of China.
A few weeks ago, I saw something peculiar on my Feedly news feed. It was a story about a soon-to-be-released YouTube series on blockchain and bitcoin created by TechCrunch called Trust Disrupted. I started coming up with creative ways to make fun of the series, envisioning making it the centerpiece of the Tradestreaming October Hype Meter. As much as I wanted to mock the series, I really liked it. The six part documentary covers a different aspect of blockchain and bitcoin in every episode. The viewer is taken from meet ups in Moscow to bitcoin mining facilities in undisclosed locations of China. Nathaniel Popper, author of the book Digital Gold, serves as the guide, introducing and wrapping up each episode (except for one…we’ll get to that later). There were two episodes that stood out for me, especially the second episode, that addressed the power of miners. Even though a decentralized ledger is supposed to be controlled by no one, miners chose which transactions are executed. Miners, theoretically, could decide to “embargo” bitcoin wallets and not facilitate transactions from an individual, business, or even a government. For executing each transaction, miners are rewarded with a small bitcoin payout, which has led to companies to find cost effective ways to mine bitcoin, looking for regions with low cost power and computing products. The cheapest place to find both those things is China, which is why between 66 and 75 percent of bitcoin miners are located there. China essentially controls the bitcoin blockchain, which should be a big concern for bitcoin enthusiasts. The final episode discusses the interaction of blockchains with financial institutions. In Co-opt vs Disrupt, Fred Wilson, co-founder of Union Square Ventures, explains that incumbents don't like the new tech because it eliminates banking fees. He sees society ready for distributed ledgers and just waiting for a “killer app” that demonstrates just how important bitcoin is. Also in the episode, Charley Cooper, managing director of R3, a consortium working with banks on blockchain technology, provides the incumbent view. He explains how banks can’t afford to ignore regulators when it comes to open ledgers. He brings up the issues of scalability, since the bitcoin blockchain can only process seven transactions a second, versus the vast number of financial transactions that go on every second. He also has a great comparison to other disrupters, like Uber and Airbnb, showing the difference between ignoring the rules of a city taxi industry and what it would take to do something similar against the SEC and Federal Reserve (it starts at 6:10). “The idea of deciding to break the rules and upend financial services is frankly naïve,” concludes Cooper. The series was successful in beating my expectations, but wasn’t perfect. Most of my issues came when balance between the positive and negatives of blockchain went off the rails. The most egregious violation was regarding Ethereum. The series makes Ethereum founder Vitalik Buterin out to be god's gift to blockchain and Ethereum to be a supercomputer that the world's economy will eventually run on. Ethereum hasn’t accomplished much yet, except for that whole DAO fiasco thing. The series is also gentle on the DAO attack and resulting hard fork. Ethereum is very creative and may become a powerhouse one day, but the series needed to be a little stronger on the bear side. My other issue was with the last line of the show. After discussing the Wall Street versus Silicon Valley fight the series ends with this line: Change from one type of economy to another is likely to be painful, but when we get to the other side, it will be better. The series just went through a pretty well-balanced discussion regarding the intricacies of blockchain and bitcoin becoming mainstream, and all of a sudden we’re changing economies? It’s unfortunate that the last line left a bad taste in my mouth, because the series was solid. Supporters from both incumbents and startups do a good job of expressing their views, with Popper balancing the two sides. It’s definitely worth a watch for those who want to understand blockchain and bitcoin in today’s world a little better.