A panel at a recent cryptocurrency event hosted by the Cato Institute discussed the differences between public blockchains (such as Bitcoin) and the distributed ledger technology currently being researched by various Wall Street firms and consortiums. Although many people view consortium blockchains as competition for Bitcoin, the reality is that these systems are mostly intended for different use cases.
While Wall Street’s distributed ledger technology may offer substantial improvements over their current systems, these permissioned ledgers may not be able to provide the level of openness and regulatory arbitrage offered by Bitcoin.
Bitcoin Enables an Open-Access Approach
LedgerX CEO Paul L. Chou was one of the participants on the recent Cato panel, and noted that the openness of the Bitcoin blockchain was the first thing that attracted him to this new technology. Chou recalled his excitement when first learning about Bitcoin:
“I think, for me, the most exciting thing was really this idea of an open-access ledger that anybody could use and anybody could, importantly, program on. So if you’re a 12-year-old kid with no relationships to Wall Street … before, it was impossible to get access to any of the ledgers that banks use right now. Now, for the first time, if you’re a talented 12-year-old programmer, you can build an application that ‒ whether you like Bitcoin as a currency or not ‒ it is moving some sort of value around in an automated way.
“We’ll find the next Mark Zuckerberg of finance potentially with this open-access approach,” Chou said. “You want the people who can just tinker on the side and not have to go through a lot of these meetings and things to get access to all these systems that banks currently use.”
Other payment platforms, such as PayPal and Ripple , also allow developers to build applications […]
