In Biser Dimitrov’s article for Forbes called ‘Will 2020 Be The Year Of Enterprise Bitcoin,’ he gives us a simple understanding of how Bitcoin is the inevitable answer to large enterprise blockchain vows. For too long bitcoin and blockchain have been seen as two separate entities, but is this about to change?
“Bitcoin is the most popular digital asset in the institutional trading world as it has the best trading options available, both spot and derivatives, proven track record with the longest history and availability of data”.
Writes Dimitrov, maybe that is why in 2019, we have seen the creation of several bitcoin products from some of the largest financial service institutions. From Bakkt’s physically delivered bitcoin futures to Fidelity Digital Assets bitcoin custody solution, and TD Ameritrade’s trading offering.
“So far the majority of enterprise-focused blockchain development has been done on permissioned and private blockchain protocols like Hyperledger Fabric and R3’s Corda. This is mostly due to the fact that they offer sufficient privacy, scalability and transaction finality guarantees. Compared to them, development on top of the bitcoin blockchain was not seriously considered until recently when in May, Microsoft announced their permissionless, Decentralized Identifier (DID) network called ION running exclusively on top of the bitcoin blockchain.”
Dimitrov continues, but this switch has caused a shift in the sentiment and this is just the start.
Dimitrov compares a study by Ernst & Young, that found the top five reasons among decision-makers across Europe, Asia, and the U.S the major reasons to consider blockchain. These are, the preservation of data integrity, the ability to build new revenue/business models, increased operational efficiency, reduced costs, and increased transparency. Based on these five reasons, he shows that bitcoin fills out all the reasons to consider blockchain in the first place.
Ticks the five boxes
Reduced costs are associated with the Lightning Network, which is a second layer protocol that lies on top of the Bitcoin blockchain. It allows cheap, private and instant transactions and payments, which is a vast improvement from using the main Bitcoin blockchain channel. There are still certain limitations, but these can be changed manually or will be improved in the future versions of the network.
In regards to the preservation of data integrity. Bitcoin is considered the most trusted and secure public blockchain. The Bitcoin blockchain is currently secured by 97 quintillion hashes per second or EH/s. What this means, is that data integrity is priority number one for the maintainers of the Bitcoin blockchain. They are very restrictive about new features that can introduce security bugs and potentially compromise the integrity of the protocol. The accuracy and consistency of the data can be easily observed and analyzed by simple blockchain explorers as well as by using a variety of surveillance tools.
At this point, Bitcoin currently has a $128 billion liquid market cap so building new models on top of it can unlock new significant revenue channels. The increased adoption of the Lightning Network will enable new business processes and ways to revenue. This will help build new revenue and business models.
Blockstream’s Liquid and the new RSK framework, Schnorr signatures, and Taproot will make smart contracts–like executions possible via sidechains will help increase operational efficiency. As opposed to the past when certain opcodes were taken out of the core protocol, smart contracts were considered taboo in bitcoin.
Increased transparency is supported and enforced by the bitcoin blockchain, contrary to other public protocols that incorporated privacy features like MimbleWimble, Confidential transactions, STARKs, and ZK-snarks. The bitcoin core developers stayed away from such features as they can make bitcoin’s monetary supply of 21 million difficult to audit and verify.
Compared to public chains, Bitcoin is having the first-mover advantage and doesn’t suffer from the same growing-pain issues as Ethereum and EOS. Security concerns most enterprise CIOs and CTOs will have with public chains are mitigated in the Layer 2/Sidechains areas. Moreover, one of the main blockchain concerns, the interoperability between networks and especially between bitcoin and others, can be explored in several ways: Keep’s tBTC or an Interledger Protocol (ILP) bridge.
Drimitrov finishes with a final note “regardless if that move is welcomed by the die-hard libertarians on the bitcoin platform, the companies that are building and investing on the protocol are open for enterprise customers and eventually, bitcoin will prove to its critics that it’s not only used for illegal activities and speculative trading.”