Bitcoin has been able to accomplish something that hadn’t been done before: build a distributed database that doesn’t require any trust between the parties involved. There are 2 innovations which made this possible : the blockchain and proof-of-work. It’s primarily being used as currency because Satoshi Nakamoto rightly found the problem of digital cash to be unsolved.

The Luther effect

Bitcoin is a head-less project: Satoshi Nakamoto decided to stay anonymous and withdraw himself to give true meaning to the decentralization of the project. The trust in the governance mechanism (consensus) is total. It’s also an open-source initiative: the original founder(s) saw more value in opening up the idea of being copied, duplicated, forked than stayed owned by one entity. Again, the principle is a pure: it allows the idea and innovation (and not necessarily the execution tied to the founding moment) to become the best reality, the best execution, and the best future.

It’s like Martin Luther protesting against the Catholic doctrine, and leading the way in interpreting Christianism in many different reformed traditions.

This means that after the concept of bitcoin was proven, many sharp minds took the idea and tried to improve it based on their own opinions. It’s “Evolution” for blockchain based currencies, which are also known now as crypto-currencies.

Many projects started with different priorities in mind, and different execution.

There are a lot of properties that make these project different:

The way they get started: forks or altcoin.

A fork will preserve the distribution and history of the coins up until the time of the fork. Then it diverges. A good example of this is Bitcoin Cash. An altcoin is started from scratch via mining or some other mechanism. A good example is Monero.

The consensus type: Proof of work or not?

We have shown that bitcoin uses proof of work to secure the ledger. Proof of work is not perfect, it’s subject to the tragedy of the common, it forces the miner to sell their bitcoin into fiat currency to pay for energy bills. Not optimal for a mainstream digital currency which tries to replace fiat currency. A new method for securing blockchain was designed: the proof-of-stake.

What do various crypto-currencies try to optimize for?

Every design makes a statement on how it sees the world, and not everyone sees the world the same way. Not everyone is happy with the design decision Bitcoin found itself in. Bitcoin has to prioritize some features at the cost of others, because of the sheer volume of development to maintain and improve software bitcoin needs to require trade-off that can’t make everyone happy. The one that is top of mind in 2017 is scalability vs the purest form of decentralization.

There are many other trade-off and optimizations that altcoins and forks are going for: from security, to flexibility, to programmability.

All forks and altcoins have different paths. A lot of them are going to fail and some of them will thrive as long as they serve a clear purpose, solve a real problem, and differentiate themselves from others. There is a world were many succeed.

Lives of their own

The mere fact that these innovations have been proven viable to build an online currency opens the door to many applications. Knowingly or not, Satoshi Nakamoto invented a technology that proves itself to allow for pure decentralization and a powerful economic model which reward for participation.

We have had decentralization in the past but the economic model was not around to support it.

The main economic model that has worked in the days of the internet is capitalism. It is working tremendously, but at the cost of centralization. Corporations are solving problems by creating solutions that people want are willing to pay for with their money or attention.

The founding protocols of the internet are decentralized, which is one of the property that makes the internet as powerful as it is. All the applications (Search, Social Networking, Commerce…) created on top of the internet have been highly centralized. There is something deeply contradictory about this fact. And the decentralization movement based on bitcoin’s inventions is trying to figure out how to leverage this new economic model to re-decentralize the applications.