If the internet created a world of low friction communication, blockchain can create a world of low friction value transfer. Indeed, blockchain’s power to transform the world can only be fully harnessed when we stop talking about blockchain and the hype is replaced by this technology fading to the background. Like all periods of fervor, where companies like Kodak and Long Island Iced Tea saw a spike in their share prices on the mere mention of blockchain or tokens, the quiet work that can indeed change the world is going on in the background largely unnoticed.
Some of the assertions of how blockchain can be used to fix literally everything border on the absurd. As satire, blockchain’s power to solve double counting, can also be used to ensure that toast is evenly browned on both sides. This type of hyperbole marked the early days of that other foundational technology the internet, when a thousand dotcom flowers blossomed, but only a few survived. The enduring firms of the internet bubble, companies such as Amazon and eBay, much like the enduring firms of the sharing economy, have all managed to use technology as a background instrument as opposed to a leading instrument. The result is there are countless blockchain enthusiasts armed with their solutions looking for problems, as opposed to leading with problems for which technology can be a part of the solution.
What all successful entrepreneurs have learned is that trial and error is a very healthy process. Much like forming a hypothesis using the scientific method, the enduring business models that emerge are based on simplicity, unmet market needs, perseverance and a lot of experimentation. Indeed, blockchain, like so many whizzbang technologies before it, is as much about a cultural shift and a way of mind, as it is about technology, cyber security, and new ways of transferring value and trust. This is evidenced by the impressive rise of bitcoin’s value in 2017 based in no small measure by CME and CBOE’s futures trading platforms. Simply put, technology alone, even when it is as powerful and foundational as the internet or blockchain, is no panacea for the world’s many challenges and the markets many inefficiencies. The more blockchain-based solutions meaningfully intersect with the real world without requiring a giant neon sign that says blockchain (although it is increasingly becoming a brand proxy for trust), the better for the technology and the better for the world.
Like the internet age before it, a cadre of blockchain billionaires will be minted by fighting friction, opacity, and institutional mistrust wherever they rear their ugly heads. For now, much of the concentration of wealth in cryptocurrencies, and how this capital is being deployed (or hoarded), militates against many of the very precepts this community stands for, including ideals like decentralization, a flat, equitable, connected world and the democratization of value and individual ownership. The challenge of course is that blockchain and cryptocurrencies are not only conflated, they are inextricably intertwined. So, the people who say they like blockchain but hate bitcoin miss the principle that in many ways these technologies are one and the same – where bitcoin is blockchain’s most widely used “killer app.” Other killer applications riding on blockchain’s rails are waiting to emerge, but for them to do so, rather than pitching fantastical initial coin offerings (ICOs), entrepreneurs should focus on and launch self-sovereign, rules-based platforms that address big societal wants and needs.
Shifting the conversation away from features, benefits and whizzbang technology, toward outcomes will greatly improve the adoption of transformational technologies. Much like sausage, or legislation, people do not particularly care how digital transformation is carried out, what they care about are outcomes. Just as the early days of the traditional economy, where fiat currencies, gold, and the greenback reigned supreme, but not risk free. Perils such as marauding bandits robbing stagecoaches filled with gold, to fraud, money laundering, terrorism finance and many complex issues that continue to grate the real economy, cryptocurrencies and the move to decentralization are similarly rife with risks. Particularly at the early adoption and experimentation phases.
Indeed, the adults in the room are helping shape prudent governance standards and behaviors about cryptocurrencies and decentralized structures. Vitalik Buterin, the developer of the Ethereum platform, for example, has warned against the risks of speculation and human behavior when investing in cryptocurrencies. That a 24-year-old programming genius is considered an elder statesman in this market, suggests we are still in an accelerating wave of prototyping. Others who seem bent on more speculative plays, such as Twitter’s is Jack Dorsey, are making seemingly outlandish statements about the direction bitcoin can take in replacing other currencies within a 10-year span. As the internet age teaches us, while change can be dramatic and transformation profound, it is nevertheless a slow-moving and less than obvious process. The future of how decentralized, low friction economics weds to the traditional world will always be governed by human behavior and our willingness to change. When we do not have to mention blockchain to successfully deploy blockchain, we know fundamental change is afoot. Nothing portends this change more than our collective distrust in institutions (public and private) and an upcoming technology-native generation who have a newly found political voice. Blockchain will be their friend.