We are long-time Bitcoin protocol developers who are convinced that finding an architecturally sound and permissionless way to extend Bitcoin is essential for cryptocurrency to reach its full potential. Bitcoin has inspired people since its inception as a new kind of money in digital form that exists independent of any government or institution. Bitcoin enables financial transactions without needing to trust any third party.
Bitcoin’s qualities and potential have encouraged widespread adoption and confidence. However, this necessarily implies a very conservative pace of development for security reasons, and this conservative pace of development means a conservative pace of innovation for Bitcoin as a whole because all users and uses must currently share a single system.
There are many necessary fixes and widely anticipated improvements to Bitcoin that remain unimplemented because of this. These include protocol simplifications, scalability, performance and security improvements, native support for multiple asset types, more expressive transaction types, and privacy and fungibility enhancements.
The altcoin approach of creating a new cryptocurrency just to introduce new features creates uncertainty for everyone looking at cryptocurrencies from the outside. There seems to be no natural stopping point, each fork can be forked again, ad infinitum. This creates both market and development fragmentation. We think that for cryptocurrencies to be successful as a whole we must build network effect, not fragmentation. We believe everyone should enjoy freedom to innovate, too, without seeking permission from us or anyone. We need a different way to get there than by attempting to disrupt our own success.
To accomplish this we propose technology to enable new cryptocurrency networks that do not need new cryptocurrencies (see our sidechains whitepaper for more information, as well as read an interview with the Wall Street Journal BitBeat). Delivering on this vision will require continued investment in and cooperation with the Bitcoin ecosystem as a whole, along with the full-time support of many people with broad and specialized backgrounds. We felt that in the Bitcoin ecosystem, and in the world at large, there is a shortage of companies working on trustless cryptographic infrastructure. That’s why we, along with our other co-founders who share our vision, came together to establish Blockstream.