Forget Cryptocurrency. We Need To Talk More About Blockchain
Ask anyone on the street and probably only one out of a hundred are able to give a proper definition about blockchain. Ask about Bitcoin and half of them will hail it as the miracle digital coin that created millionaires . To ignore the underlying technology behind Bitcoin and a thousand other cryptocurrencies would be equivalent to talking about Facebook and Amazon and ignoring the Internet.
During the early days of the Internet, critics expected the technology to fail due to the low rates of adoption and the fact that it was revolutionary. In the 1980s, the idea of sending packets of information over a virtual highway to users at the other side of the world was an abstract concept that many were unable to grasp. Right now, blockchain presents another opportunity to reinvent to change the way we communicate; to circumvent human trust and enable communication through a network of nodes capable of validating our behaviors. The birth of Bitcoin by Satoshi Nakamoto in 2008 sparked an interest in blockchain and gave us a glimpse of a decentralized society. However, all attention is now on the cryptocurrency market, spurred by the meteoric rise in the market capitalization last year.
“We are only beginning to grasp the seismic nature of the changes induced by the ubiquitous decentralized ledgers and the quasi-instantaneous clearing they make possible.” — Peter Smith, co-founder and CEO of financial technology and data company Blockchain
Truthfully, cryptocurrencies are a lot easier to understand than blockchain. Just dabble in Bitcoin, buy a couple altcoins (alternative coin, referring to every other cryptocurrency that is not Bitcoin) and try to profit from the sentiment of the market. At present, trying to profit in the crypto-market is more of a game of luck than due diligence. In contrast, getting your feet wet in the blockchain industry requires a fundamental understanding of the technology as well as the economic, social and political aspects that comes with it. Furthermore, with blockchain getting more complicated and sophisticated by the day, it presents an ever-steeper learning curve for those seeking to understand the technology, let alone enter the industry.
Richard Bradley of Deloitte simplifies and explains the idea of blockchain succinctly is less than a hundred words: You (a “node”) have a file of transactions on your computer (a “ledger”). Two government accountants (let’s call them “miners”) have the same file on theirs (so it’s “distributed”). As you make a transaction, your computer sends an e-mail to each accountant to inform them. Each accountant rushes to be the first to check whether you can afford it (and be paid their salary “Bitcoins”). The first to check and validate hits “REPLY ALL”, attaching their logic for verifying the transaction (“Proof of Work”). If the other accountant agrees, everyone updates their file… This concept is enabled by “Blockchain” technology.
Another issue that deserves serious attention is: Is blockchain necessary?
Do we really need blockchain? Do we really need to upload our everyday transactions to the network? Do we need to tokenize every asset we can think of? Today’s systems are more than sufficient to fulfill our needs and most consumers are comfortable with having their personal data collected by a company or forking out a small premium to have an intermediary handle their transaction. The benefits of blockchain (e.g lower cost, better transparency and a more secure network ) are not felt or worse, deemed unnecessary. Till date, such advantages are only leveraged upon by big enterprises. Many of us have fallen into the comfort zone created by intermediaries and tech titans, leading to stagnation and complacency in the global ecosystem. The rise of start-ups using technologies to challenge the status quo has never ever been more important. But the hype of blockchain has led to the idea of “blockchain-izing” every asset and activity you can possibly think of, leading to a plethora of pointless blockchain start-ups and ‘shitcoins’.
“We can tokenize almost every asset you can think of, but we don’t need to do so.” —Tom Huang, senior investment analyst at Fenbushi Capital and co-founder of Hashgard and BKFUND
Today’s growing attention towards the state of the cryptocurrency market has distracted us from the developments in the blockchain industry. It is imperative for us to focus on the progress of the technology rather than the potential gains from the trading of it. Many of us have failed to realize that Bitcoin was created right after the 2008 Financial Crisis, where greed led to the demise of human trust. As the industry heads towards a new unknown, it would be appropriate for us to revisit our past and re-evaluate our definition of trust as it transits from a moral to a digital form.
As a foundational technology that can fundamentally change the way the society works, blockchain provides a community of strangers the opportunity to trust each other through computing power. While it sounds paradoxical, this is the core value proposition of blockchain. Nonetheless, we should always be wary of possible breaches such as the double-spend attack (a.k.a 51% attack) where trust is placed on a community of user with ulterior motives.
We also cannot ignore the dark side of blockchain. Critics of bitcoin often slam the currency for its use in money laundering and as a means to fund terrorism and illegal activities. One of the first adopters of Bitcoin were in fact Dark Web users who leveraged on the anonymity features of the digital coin to carry out transactions. While bitcoin is not as anonymous as it seems, such use cases has proven that cryptocurrencies is feasible to a certain extent. However, to create a blockchain-enabled world would require a paradigm shift at our approach towards blockchain. This can be achieved through corporates, blockchain firms, ground communities, international organizations and finally, people like you and I.
So how do we actually make it a reality? Sell the vision, simplify the use of blockchain, or educate the world about it? Should we use a top-down or bottoms-up approach?
Corporate Firms
Early adopters of blockchain in the corporate world are limited to enterprises with deep pockets. Many corporate firms such as Walmart, IBM and Alibaba have been experimenting with blockchain with results that trumps current systems. A win-win situation can be achieved if a symbiotic relationship is formed, both among firms and between firms and consumers. Blockchain should not be built firm by firm but rather, community by community. Having a group of firms working together to create the necessary blockchain ecosystem will be crucial to adoption on the end-user level. As to whether blockchain will remove or enhance these very companies it meant to exclude from the beginning will be anyone’s guess. However, it is my firm belief that firms and communities should co-operate to actualize the value of blockchain in order further advance the society as a whole.
“A decentralized world wide web will ensure that power shifts from capitalists such as Amazon, Google and Facebook back to the individuals…” — Monica Singer, current member of the global Blockchain Advisory Council
Blockchain Start-ups
In particular, we ought to scrutinize blockchain firms. Responsible for creating the building blocks of blockchain, they play a critical role in advancing the technology and building communities that will eventually power blockchain. The congregation of talents will undoubtedly bring about innovation in the industry. During the ICO boom, start-ups placed tremendous emphasis on social media, be it Telegram or Slack. Many crypto-investors relied on the number of telegram users and the ICO hard and soft cap as indicators of a quality ICO. However, many ICO communities lacked the gas to power on as the ICO fad fades off in late 2017.
Ground Communities
For ground communities, stop looking like a snake oil salesman and go round selling the vision of a decentralized world. Instead, increase visibility to attract individuals who are interested to be part of the change. The communities are feverish about the cryptocurrency market but lack the same enthusiasm for the blockchain industry. Indeed, individuals in the crypto-market are mostly traders looking for a quick profit and are less concerned with the developments in the industry. It is important to educate the public about the fundamentals blockchain and the perks it can bring. Conducting courses on blockchain would be far more meaningful than inviting startups to meetups to promote their company.
Average Joes
Then what should we do? Study the technology, be up-to-date of the latest development and play your part in community building. For crypto-investors, invest in firms with 1) a vision, 2) a detailed whitepaper, 3) a well-planned roadmap that is kept on track, 4) a experienced team and 5) a well-maintained social presence with an active community. Avoid the hype; all hypes are pump and dump schemes, PERIOD! Stick to the basics and always carry out fundamental analysis as preached by Warren Buffett in stock investing. In layman terms, do your own diligence (DYOD) and don’t invest in hypes and shitcoins.
Crossing the Chasm
To conclude, blockchain is a pandora box, for no one knows the potential it can unleash onto the society. In today’s era when human trust is no longer a necessity but a luxury, blockchain could be our solution. While early signs of implementation show promising results, we are still at the nascent stage and many more development awaits to be seen. It is without a doubt that as the communities grow and adoption rates increases, we will surely see more time and resources being devoted to the technology, making it ever more valuable. As we begin crossing the chasm from early adopters to early majority, the future of blockchain will be ever more exciting for those who are part of this revolution.
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Hi all! I’m currently a tech writer based in Shanghai and Singapore. I write about the latest tech happenings in the various industries as well as commentary on technologies such as Blockchain and Artificial Intelligence. **Do CLAP, SHARE and COMMENT! I also welcome any opportunities that arises**
