THE ONE where the blockchain is ascribed super-powers that we all know it doesn’t have.
Practically every day now, we see an ICO lining up to claim that it is about to revolutionise some industry through the use of the Blockchain. But, in actual fact, the vast majority of ICOs in operation present business models that patently exhibit no specific requirement for blockchain technology.
With descriptions like “We are a decentralised airline reservation platform” and “We are building the world’s first decentralised professional network,” there has been so much overkill in the use of the word decentralised over the last twelve months that I have become instinctively suspicious of any project that uses the term.
And it even feels like people who use the label expect some kind of congratulations – along with your money – for having applied the label to their project. The word has essentially become overloaded with an almost nauseating sense of sense-entitlement. I don’t think I’m the only one who feels like this.
A couple of weeks back, a certain Terence Eden published a blog in which he ridiculed the Verisart project. The team behind Verisart are, Eden explains, building “a distributed public ledger of who I have sold my art to. And, if they sell it, they have a cryptographically signed certificate proving its provenance.”
The word Decentralised has essentially become overloaded with an almost nauseating sense of sense-entitlement.
It’s all in there – lots of buzzwords: distributed public ledger, crytographics, provenance. And likely those buzzwords were enough to get some people lining up at the door to invest.
The problem, however, as Eden points out, is that “there’s no way to permanently attach a digital certificate to a physical work of art.” To prove his point, he registered an image of the Mona Lisa onto the Verisart blockchain against his own name.
To conclude his argument, he then stated “this, incidentally, is the problem with all the startups claiming the blockchain will revolutionise the integrity of global logistics markets. Sure, you can slap a QR code on a crate – but nothing stops an unscrupulous middle-man from replacing or adulterating the contents of the crate itself.”
Cynics Missing the Point
It was at this point that, in reading Eden’s blog, I could sense that the extreme hype and overbearing puff around blockchain technology is itself resulting in another phenomenon: the assumption that blockchain technology and ICOs are essentially a fad.
And it is here that, once again, we can see a parallel with the dotcom boom of the early noughties. Back then, companies with practically no assets and zero revenues were lining up to IPO with nothing other than an idea which seemed promising for the simple reason that someone had attached the label “internet” to its business model.
But, of course, we can see with hindsight that the internet did revolutionise our lives – and that the entities which did so were only a minority among the vast number of companies which had been promising to harnass the new technology. We are very likely witnessing at this very moment the same thing with blockchain start-ups.
95% of ICOs – if not more – will essentially have disappeared probably no less than eighteen months from now. And there is perhaps even a chance that Bitcoin itself will floor to zero along the way. But it appears almost certain that some cryptocurrencies – likely no more than a couple of dozen – will hold value over time, perhaps even grow exponentially, for one very simple reason: they are underpinned by sound business models and strong fundamentals.
Identifying these blockchain successes of the future, on the other hand, is its own subject of discussion.