For Boxing Day a punch or two at Willy Hutton

Will Hutton decides to tell us all how much Bitcoin and the blockchain is going to change our world:

Blockchain is a foundational digital technology that rivals the internet in its potential for transformation. To explain: essentially, “blocks” are segregated, vast bundles of data in permanent communication with each other so that each block knows what the content is in the rest of the chain. However, only the owner of a particular block has the digital key to access it.

So what? First, the blocks are created by “miners”, individual algorithm writers and companies throughout the world (with a dense concentration in China), who want to add a data block to the chain.

Will Hutton is, you will recall, one of those who insists that the world should be planned as Will Hutton thinks it ought to be. Something which would be greatly aided if Will Hutton had the first clue about the world and the technologies which make it up.

Blocks aren't created by miners and individual algorithm writers, there is the one algo defined by the system and miners are confirming a block, not creating it. The blocks are not in communication with each other, they do not know what is in the rest of the chain - absolutely not in the case of earlier blocks knowing what is in later. It's simply a permanent record of all transactions ever undertaken with an independent checking mechanism.

It's entirely true that this could become very useful. But it's really not what Hutton seems to think it is. Nor is it going to transform healthcare:  

Our health data can be given to the whole chain for it to assess, rather than an individual doctor, and the chain can then assess and price an insurable risk.

The blockchain doesn't process data in the manner Hutton thinks. The only calculation is to ensure that the data is robust and agreed over the chain. No processing of the contained data takes place at all.

Nor will it transform banking:

One of the first casualties could be banking. Already, you can present your card to make a contactless payment in a store, pub or taxi. Cash has become digitised, although the payee wants to know that a bank has validated the creditworthiness of the payer before accepting the transaction.

That is a payment system, not banking. As Brad Delong points out the definition of banking is borrowing short and lending long - if you don't do this whatever it is you're doing isn't banking, if you do it is. Bitcoin and the blockchain don't do maturity transformation - in fact, on a strict interpretation of the system they rule it out.

This being one of the problems about having a world that is planned to work the way the likes of Willy Hutton think it should be planned. Those desiring to do the planning according to their prejudices don't seem to have much knowledge of the system beyond their own prejudices.