Digital Currency Innovation Sources

By Othman Darwish

Scientific researches results, which forming the knowledge push source, is one of the major sources of innovations. In Digital Currency world, Satoshi Nakamoto, in his famous paper[1],founded the bases for fully decentralized, peer-to-peer payments model, without the need for any centralized trusted authority, this model of cryptographic proofs was a replacement for traditional trusted entity. The scientific breakthrough that Nakamoto come with it, was relayed on a proposal for a solution of well-known problem, in the distributed computed network –The Byzantine Generals Problem- [2]  .The emergence of distributed ledger technology or what is known as Blockchain , is forming the underlying technology which all today cryptocurrencies like bitcoins  built on  it. Although Nakamoto as individual solo researcher, the process of exploring and organizing the knowledge, became a systematic activity, which involve wide network of people sharing their ideas  [3] , the distributed ledger technology has accelerated improvement as a result of organized research and development, this collaborative efforts , underpinning the process and products innovations, for example, HyperLedger project  [4] was created to advance the development of cross-industry Blockchain technologies, its open source global collaborative efforts, building a network of leaders in finance, banking, Internet of Things, supply chains, manufacturing and Technology.

Consumer of products and services, sometimes play important and active role in products innovations, Bitcoins payments network is an open source project, developed by a community of users, in the same way, most of today cryptocurrencies is based on user-led innovation and collaborative efforts of crowd-sourcing approach. For example,ZeroCash [5] project and its innovated cryptocurrency Zcash, developed to provide privacy-preserving of Bitcoin transactions, by using zero-knowledge cryptography proof, which was developed decades ago. From the other hand, Bitcoin as platform open new opportunity and founded for new entrepreneurs’ innovations through alt-coin and meta-coins. Ethereum network add another dimension to distributed ledger technology, by building custom Blockchain, which act as shared decentralized global infrastructure, that run unstoppable application smart contracts – application code -  without ability of human intervention, and enable machine to machine payments.  Smart Contract as platform, open new radical innovation like Decentralized Autonomous Organization –DAO- which act as self-organization entity, with its own rule sets, and designed in a way that human involvements is limited or not needed at all, such radical innovation –when success – going to change our definition and understanding of how businesses and corporations are structured and formalized.

Bitcoin as newly innovated payment network, tend to be considered as radical discontinued design innovation, design-led innovation gives new meaning and experience for their users without a need of demand pull (user needs), by shaping new definition or meaning of what people believes for decades, what is money? how it created, and who give it a value? Unlike traditional fait- currencies, or governments issued currencies, Bitcoins is unique in its design and protocols, self-managed entity, as it is not controlled by any government, or agency, instead, people and businesses - miners – from all over the world, can participant in order to produce bitcoins values using computer resources, when solving mathematical problem, Bitcoin monetary policy is embedded inside the network itself, and designed in such a way that no one can change the policy even in the extreme situations. Bitcoin as monetary policy is fully open and transparent as opposed to governments or central banks monetary policies. And this is new paradigm which changed the traditional monetary policy tools and creation cycles, which has its impact and consequences in today well know monetary policies in world economics, such radical newly innovated experience may vanish or at least change many of today mature businesses, such as banks and financial firm all over the world.

Innovations don’t just appear perfectly formed – and the process is not simply a spark of

imagination giving rise to changing the world. Instead, innovations come from a number

of sources and these interact over time.  different sources of innovation have varying important role over time, Unlike traditional industry revolution start time ,and manufacturing innovation sources, It is now widely accepted that innovation includes a wide range of activities beyond traditional production R&D Labs (only scientist can innovate), Now day, collaborative innovations happened beyond a traditional organization departments, where everybody could contribute into innovations, Crowd-Sourcing (Open Source) innovation like digital currency, connect a groups of people from all over the world  and form collaborative innovation network ,that have many benefits  such as Global reach, rapid experiments and result evaluation, providing wide array of ideas and solutions, and selecting best solutions , as result accelerating the emergence of new innovations and creating new opportunities .

  

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[1] Satoshi Nakamoto 2008 Bitcoin: A Peer-to-Peer Electronic Cash System

[2] The Byzantine Generals Problem

https://www.microsoft.com/en-us/research/publication/byzantine-generals-problem/

[3]  Source of innovation http://www.innovation-portal.info/book3chapters/6-sources-of-innovation/

[4] HyperLedger project https://hyperledger.org/about

[5] Zero Cash project http://zerocash-project.org/