When researching Bitcoin you’ll tend to hear via certain people and publications how the long term promise of the asset is not within the currency but in the blockchain, the decentralized and distributed ledger. Many of the pundits verbalizing this sentiment believe more so in the technology but not in a digital currency as an alternative or eventual replacement to the current fiat money system. The blockchain achieves a trustless, decentralized system whereby users can achieve automated consensus (think contracts, voting machines, the payment network etc) and that is where the real opportunity is…not within the currency itself.
While the real upside may very well be within the brilliance of the blockchain, the fact is that the blockchain does not work without mining or the resulting output of the Bitcoin token. It’s the job of the miners to verify the inputs and transactions coming into the network – they are the foundation of this trustless system. And, the miners are incentivized by the token, or Bitcoin, they receive as an award for their validation exercise. Seeing that Bitcoin has value, the miners want it, and do their job to get it.
On the other hand, if you had a relatively centralized system with a group of “preferred” miners, this would make the attraction of Bitcoin and blockchain a moot point. Why? Well, being decentralized makes Bitcoin much less susceptible to being shut down by any bad actors or the authorities. A centralized system, many of which exist today, can be taken out with relative ease….Bitcoin cannot due to the decentralized architecture of the blockchain driven by the miners who are plugged into the token incentive system.
In conclusion, next time someone says the blockchain may survive past the Bitcoin currency, let them know that the issue is not as simple as it seems. The blockchain and Bitcoin are intimately intertwined, hence the brilliance of Satoshi’s invention.