Blockchain: Blueprint for a New Economy

these could be used in specific cases

to help usability. Many blockchain

companies provide alternative

wallet interfaces that have this kind

of functionality, such as

Blockchain.info’s numerous wallet

APIs.

Business Model Challenges

Another noted challenge, both functional

and technical, is related to business

models. At first traditional business

models might not seem applicable to

Bitcoin since the whole point of

decentralized peer-to-peer models is

that there are no facilitating

intermediaries to take a cut/transaction

fee (as in one classical business model).

However, there are still many

worthwhile revenue-generating products

and services to provide in the new

blockchain economy. Education and

mainstream user-friendly tools are

obvious low-hanging fruit (for example,

being targeted by Coinbase, Circle

Internet Financial, and Xapo), as is

improving the efficiency of the entire

worldwide existing banking and finance

infrastructure like Ripple—another

almost “no brainer” project, when

blockchain principles are understood.

Looking ahead, reconfiguring all of

business and commerce with smart

contracts in the Bitcoin 2.0 era could

likely be complicated and difficult to

implement, with many opportunities for

service providers to offer

implementation services, customer

education, standard setting, and other

value-added facilitations. Some of the

many types of business models that have

developed with enterprise software and

cloud computing might be applicable,

too, for the Bitcoin economy—for

example, the Red Hat model (fee-based

services to implement open source

software), and SaaS, providing Software

as a Service, including with

customization. One possible job of the

future could be smart contract auditor, to

confirm that AI smart contracts running

on the blockchain are indeed doing as

instructed, and determining and

measuring how the smart contracts have

self-rewritten to maximize the issuing

agent’s utility.

Scandals and Public

Perception

One of the biggest barriers to further

Bitcoin adoption is its public perception

as a venue for (and possible abettor of)

the dark net’s money-laundering, drug-

related, and other illicit activity—for

example, illegal goods online

marketplaces such as Silk Road. Bitcoin

and the blockchain are themselves

neutral, as any technology, and are “dual

use”; that is, they can be used for good

or evil. Although there are possibilities

for malicious use of the blockchain, the

potential benefits greatly outweigh the

potential downsides. Over time, public

perception can change as more

individuals themselves have ewallets

and begin to use Bitcoin. Still, it must be

acknowledged that Bitcoin as a

pseudonymous enabler can be used to

facilitate illegal and malicious

activities, and this invites in-kind “Red

Queen” responses (context-specific

evolutionary arms races) appropriate to

the blockchain. Computer virus detection

software arose in response to computer

viruses; and so far some features of the

same constitutive technologies of

Bitcoin (like Tor, a free and open

software network) have been deployed

back into detecting malicious players.

Another significant barrier to Bitcoin

adoption is the ongoing theft, scandals,

and scams (like so-called new altcoin

“pump and dump” scams that try to bid

up new altcoins to quickly profit) in the

industry. The collapse of the largest

Bitcoin exchange at the time, Tokyo-

based MtGox, in March 2014 came to

wide public attention. An explanation is

still needed for the confusing irony that

somehow in the blockchain, the world’s

most public transparent ledger, coins can

disappear and still remain lost months

later. The company said it had been

hacked, and that the fraud was a result of

a problem known as a “transaction

malleability bug.” The bug allowed

malicious users to double-spend,

transferring Bitcoins into their accounts

while making MtGox think the transfer

had failed and thus repeat the

transactions, in effect transferring the

value twice. 186 Analysts remain unsure if

MtGox was an externally perpetrated

hack or an internal embezzlement. The

issue is that these kinds of thefts persist.

For example, recent headlines inform us

that the Moolah CEO disappeared with

$1.4 million in Bitcoin (October

2014), 187 $2 million of Vericoin was

stolen (July 2014), 188 and $620,000 was

stolen in a Dogecoin mining attack (June

2014). 189

Blockchain industry models need to

solidify and mature such that there are

better safeguards in place to stabilize the

industry and allow both insiders and

outsiders to distinguish between good

and bad players. Oversight need not

come from outside; congruently

decentralized vetting, confirmation, and

monitoring systems within the ecosystem

could be established. An analogy from

citizen science is realizing that oversight

functions are still important, and

reinforce the system by providing checks

and balances. In DIYgenomics

participant-organized research studies,

for example, the oversight function is

still fulfilled, but in some cases with a

wholly new role relevant to the

ecosystem—independent citizen ethicists

—as opposed to traditional top-down