The Revelator: On Permissioned Ledgers & Bitcoin

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Opposing camps have emerged regarding the debate of permissioned ledger technology and Bitcoin. Here I summarize my thoughts on this dynamic and make the case that permissioned ledger tech and bitcoin represent two radically different experiments; one evolutionary — the other revolutionary.

A Difference in Opinion

I think it is fair to say that the perspectives of these camps could be summarized as follows:

Proponents of Permissioned Ledger Tech: Believe it is possible to harness value through blockchain technology innovations without the requirement of decentralization or native tokens. Believe a blockchain is a distributed ledger. Are generally blockchain agnostic. Work with legacy systems to explore savings opportunities such as clearing. (Ex: Ripple, R3 CEV, ERIS).

Opponents of Permissioned Ledger Tech: Believe the primary benefit of blockchain technology is the ability to transact P2P without the need for a 3rd party (legacy systems). Believe a blockchain is a distributed and decentralized (to the extent possible) ledger with a native token. Generally support the most decentralized blockchains; bitcoin, litecoin, ethereum, etc.

I imagine many will read these definitions and assume that these two camps are fundamentally at odds with one another. In the landscape of public debate they are often presented as such.

I believe these assumptions to be misguided based on the idea that these experiments (permissioned ledgers & bitcoin) represent two drastically different efforts. Permissioned ledgers represent projects focused on improving legacy systems. Bitcoin and decentralized blockchains represent a movement to remove the need for legacy systems entirely.

Evolution vs. Revolution

Evolution can be defined as a gradual change or improvement. When comparing the Model-T to the Tesla the superiority of the Tesla is the result of successive evolution’s in automotive technology.


The first Model-T went into production in 1908. The first Tesla Roadster went on sale in 2008. 100 years of automotive evolution.

Revolution can be defined as a sudden, complete or marked change. When comparing the Tesla to the first airplanes the superiority of the airplane is the result of a revolution in the concept of transportation.


The first Tesla Roadster can only drive on roads and can not leave the ground, traverse over a stone wall or cross a river. The first airplane flown by the Wright Brothers in 1903 traveled 120 feet by air and could do all of the above even in its primitive state. This was a revolution in transportation.

Blockchain Technology: Evolution & Revolution

Permissioned ledgers represent an evolution in banking. The goal of permissioned ledgers experiments is to explore how legacy systems could marginally improve with the use of the technology. The primary focus is to understand what kind of savings and efficiency might be achieved to the benefit of financial institutions and their customers. If I were to take the liberty of assuming the principles of those working on such efforts I might imagine them being as follows: explore how blockchain technology can provide better services at lower cost to customers.

Distributed and token-based technologies like Bitcoin represent a revolution in banking. The seed of bitcoin efforts (and where most of the debate in the space is focused) is how to establish as decentralized a system as possible to ensure transactions can be secured P2P with no middle man. This is revolutionary in both thought and application and has significant implications if the movement grows. If I were to take the liberty of assuming the principles of those working on decentralized efforts I would imagine them being as follows: explore how blockchain technology can establish a sustainable system enabling P2P transactions without the need for a third party.

A Healthy Co-existence

An evolution in banking is a good thing. If legacy institutions can leverage permissioned ledger technology in the short term, however marginally,  to reduce costs and improve the services they provide their customers this is a good thing. Who doesn’t want to be charged less and have faster clearing of their assets?

A revolution in banking is a great thing. If the promise of P2P systems like Bitcoin can be achieved at scale in the long term  the world will be a dramatically different place in the decades ahead (likely for the better). Who doesn’t want to have true financial autonomy?

Today we have both planes and automobiles. Despite the revolutions in transportation not everyone is a pilot — and evolution in automotive technology is welcome and frequent. These technologies co-exist and likely will for some time.

I view permissioned ledgers and blockchain experiments in much the same way. Despite the revolutionary opportunities Bitcoin foreshadows not everyone uses it yet — and evolution in modern banking should be welcome in the interim.

That being said, I welcome the day I can fly my Tesla over a river while paying my electric bill in bitcoin.


Ryan’s “Traits of Money” Series ( Part I )

This is Part 1 of a series of posts discussing the “Traits of Money” Chart

In May 2014 I published an article on CoinDesk discussing the traits of money in the context of Universal Darwinism. You can view it here. Imbedded within the piece was a chart I created displaying the traditional “traits of money” as recognized historically as well as some “new traits” now made possible by blockchain technology.  It ended up making the rounds over the past 9 months making its way across twitter, reddit and even into Pantera Capitals most recent monthly bitcoin letter. I have been pleased to see its been well received and also stirred up some great debate and discussion. My only regret is that I have yet to give it the full and thorough explanation it well deserves to defend the traits I chose to include and my initial ratings of each.

It is worth noting I recognize it has become a seemingly unpopular opinion nowadays to claim bitcoin is a good or better form of money. I’m finding more and more opponents, and even proponents, choosing to attack or deny this possibility. Proponents often boast bitcoin will find its niche as a payment platform or intermediary for exchange ignoring the “form of money” debate altogether — possibly in an effort to be taken more seriously in a professional world wrought with criticism (I can empathize with this and also acknowledge they may very well be right too). Opponents often have direct but wildly uninformed arguments often referencing 150 years of economic theory interwoven with biased opinion. It is my belief that irregardless of whether bitcoin or cryptocurrencies succeed or fail we need look no further than the inherent traits of money to determine which is best.

For those interested in diving deeper into this subject… before you read on I only ask you take 10 seconds right now and do your best to detach yourself from your traditional understanding of money. As best you can, wipe the slate clean and think not of money as paper bills or metal coins but as a tool that requires specific traits to fulfill its purpose. You’ve been dropped off onto planet earth for the first time and you’re tasked with the job of creating the tool the world will use for money… no pressure.

Here is the chart again for your reference:


I spent a significant amount of time designing the table and pondering which traits to include as well as the degree (Low, Medium, High) to which each form of money fulfills each trait. As no such table yet existed I realized this may become a useful reference for many in the future so I didn’t want to drop the ball.

Traits vs. Characteristics

It is important to understand why I chose to use the term “trait” instead of “characteristics”. In biology traits are heritable through the genotype (genes). They are the intrinsic elements that determine our makeup. Characteristics on the other hand are expressions of a genotype within a given environment — this is known as a phenotype.

Stated more simply — characteristics are the result of traits.

The chart below may provide added context (‘Scarcity’ is a trait while having ‘High Scarcity’ is a Characteristic):

Screen Shot 2015-01-15 at 9.20.24 PM

I make this point because I’ve seen many people claiming that bitcoin is inherently “too volatile” to be used as a form of money. Take only the most recent “Ponzi” whistle-blower Gary North’s article from Kernel.

“Bitcoins are too volatile in price ever to serve as a currency.” – Gary North

The mistake these individuals make is that they perceive price volatility to be a “genotype” of money (intrinsic) when it is in fact a “phenotype” (extrinsic).

I’ve seen many individuals in the commentary of the article and on reddit make the same mistake. They propose that certain traits be added to the table when in fact they are referring to extrinsic characteristics. One such example is “Network Effect”. It is easy to recognize that network effect is not an intrinsic trait of any form of money — rather “network effect” it is the result of a money’s inherent traits thriving in a given environment. The first person to ever find gold didn’t pick it up and say “hey – this has incredible network effect!” — most likely they said, “wow – shiny!”. Over time golds scarcity, durability & fungibility were likely big contributors to its success and network effect.

In Part 2 I will begin to break down my position on each trait and give context to what may appear to be a system of sweeping generalizations. Let’s be honest, a “Low, Medium, High” rating system is so I look forward to adding context.