Blockchain Technology: Bloodshed Before the Bloodless Revolution

In a recent Medium post, I wrote about how we are approaching a defining moment for blockchain technology and its financial technology application, cryptocurrency. I further highlighted how the lack of understanding of blockchain technology among US law makers and regulators has stymied innovation, and how the success of blockchain technology — which has revolutionary and immediate real-world applications — will likely be predicated on Silicon Valley’s willingness and ability to adopt it.

Since writing this post, we’ve seen US lawmakers demonstrate a startling lack of understanding of the benefits and risks of one of the world’s most used, and perhaps, least complex, pieces of modern technology — social networks — in Mark Zuckerberg’s testimony to Congress. We’ve seen cryptocurrencies sputter as we entered the longest bear market since tokens went “mainstream.” It’s difficult to imagine a few months ago, it’d be hard to leave a barbershop, cafe, or Lyft without a conversation around a new idea for a digital economy.

In a round table at the World Economic Forum, Chandler Guo, declares when it comes to blockchain’s application to financial services, “fintech” is a misnomer; instead, it should be called “techfin.” Technology and math, he argues, will lead to “revolutions.”

The revolutions blockchain technology will spark are far greater than its applications to the financial services industry, which, at best, represent a mediocre use case.

To be sure, the technology developed by beyond protocol, a company I cofounded with Denis Benic (cofounded/CTO, ink.me) and Guri Ahluwalia (former CTO IBM Blockchain | IoT | Cloud) could address the gun violence epidemic our nation faces without denying citizens’ Second Amendment rights. In fact, in a world where law-abiding citizens are afraid their digital activities could be used against them in an attempt to gain leverage by authorities with ill-intent, it could offer basic protection against mounting abuses of power and corruption. And it could do all of this in under eighteen months as a start-up run by experienced operators.

Here’s what’s required for this type of success to become prevalent in the short-term:

i. Awareness of the fundamental difference between cryptocurrencies and blockchain technology (I detail this my previous Medium post)

ii. The creation of an environment which supports and celebrates blockchain technology innovation (the US is woefully behind here)

iii. The aggressive discrimination between legitimate new businesses creating meaningful blockchain technology, and those creating vaporware and defrauding unsophisticated investors

iv. The penalization of investors sophisticated enough to know the difference between the legitimate and illegitimate, but, in the pursuit of short term gains choose to be ambivalent, leaving amateur investors to pay the price and the industry as a whole to get slandered by association, delaying meaningful progress

Here’s what I predict:

i. Backers of most early cryptocurrency projects will lose the vast majority of their investments

ii. Enforcement agencies will come down hard on the most flagrant offenders, but will not come down at the frequency and with force needed to draw clear distinction between the “good guys” and the “bad guys”

iii. Overtime, start-ups like beyond protocol will develop enterprise blockchain solutions and succeed by monetizing them in bite-sized use cases for larger technology companies looking to gain defensible advantages against their competition (an established product-market pipeline in Silicon Valley)

Here’s what I think would move the needle in the right direction:

i. Healthy skepticism applied to new ventures claiming to be developing blockchain technology from an ecosystem which does foster an established product-market pipeline or does not have the resource pool needed to rapidly innovate upon and operationalize an idea

ii. Deregulation of the token economy for B2C ventures (B2C ventures often require crowdfunding from early adopters to get going — token sales, when done right, can back a project and reward a venture’s first users, who often roll up their sleeves to provide invaluable product develop feedback and marketing). We have a systemic issue among lawmakers and regulators — they don’t get technology. We need to change this.

A technological revolution is likely, others may follow suit with the transition of generations and other factors. The speed at which we all evolve — and the stage from which it happens — is at stake.