Last week, there was a panel at SXSW that was effectively a debate on the merits of permissioned blockchains versus permissionless systems like Bitcoin. I listened to the entire audio of the panel discussion, after Programming Bitcoin author Jimmy Song tweeted it out the other day, and I thought he did an awesome job of pointing out the key value proposition of Bitcoin and why it is not worth comparing to permissioned systems.What Was the Innovation With Bitcoin?As Song covered in his remarks during the panel, the key innovation with Bitcoin was the use of proof of work to enable anonymous actors to take care of the ordering of transactions in a digital financial system. While other digital cash systems were tried in the past, no one was able to come up with the perfect system that could solve issues related to centralization and Sybil attacks.With Bitcoin, Satoshi Nakamoto hit the sweet spot.I recently wrote about this same topic in the context of alternative cryptocurrencies that really shouldn’t be referred to as “cryptocurrencies.” Specifically, something like Ripple (XRP) is not comparable to Bitcoin because the system does not use anonymous validators.Song hit on this same point while providing his definition of centralized versus decentralized systems.“Here’s what I mean: it’s centralized if there’s a single point of failure,” said Song. “And I say that because that is exactly how governments control things.”Bitcoin’s...
