A Brief History of Blockchain Adoption
Lately I’ve noticed within the crypto-community calls for definitive statements on the past, present, and future of cryptocurrency. Particularly on Twitter, it’s almost a daily occurrence to find someone demanding that economists admit they were wrong about Bitcoin or that people need to accept Ether, the crown-prince of cryptocurrency, as the new sovereign.
While I harbor no doubts about the impact blockchain and distributed ledger technology will have on our global future, I think it’s important to remember that this tech is still new, and many of the events we’re witnessing are happening for the first time ever. Without historical precedent, it might not be as easy as some people wish to claim the success or failure of cryptocurrencies.
An Important Note of Distinction
Before I go any further, I want to be clear that there is a clear division between cryptocurrencies, the tokens and coins that are “digital cash,” and blockchain/distributed ledger technology (DLT). Tomorrow we could wake up and every cryptocurrency could be worthless (unlikely, but technically possible). Should that happen, should cryptocurrencies self-destruct and lose all value, distributed ledger tech like blockchain will survive and continue to evolve.
What Satoshi Nakamoto accomplished by publishing the Bitcoin Whitepaper was to introduce the world to a new way of thinking. By solving the Byzantine General’s problem, Nakamoto unlocked our ability to utilize blockchain and distributed ledger-based protocols, and there’s no going back from that.
Cryptocurrencies/tokens/coins are a byproduct of blockchain and DLT. For many use cases, a token makes sense as units for transacting, supporting the transmission of information or value like a carrier protein in the cell. So as long as blockchain persists, there will be a place for tokenized digital currency. Again, it doesn’t seem likely or even probable that all cryptocurrencies lose their value and tokens become merely a form of transacting on networks with no monetary function, just one possibility to highlight the independence of DLT from crypto-economics.
If you spend any time perusing social media for cryptocurrency conversations, I wouldn’t blame you for leaving with the impression that everyone and their mothers is buying, holding, and trading some coin. The truth is cryptocurrencies aren’t as mainstream as Twitter or Reddit would have you believe. But we’re getting there.
Luis Cuende, Project Lead at Aragon and all-around smart guy, told me once that first come the banks, then governments. He said:
You have governments and banks who have a lot of power and they’re noticing what’s happening- we’re seeing that now, banks getting into the cryptocurrency space, and I think that trend is only going to accelerate. And then after the banks, governments will come. Then other governments will come.
Let’s take a look at how that’s played out so far:
- R3 included among its members: Barclays, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, J.P. Morgan, Royal Bank of Scotland, UBS, Bank of America, BNY Mellon, Citi, Deutsche Bank, HSBC, Morgan Stanley, Royal Bank of Canada, and more.
- Santander, CME Group, Goldman Sachs (to name a few) establish internal blockchain research teams.
- Skandianbanken Norway integrates Bitcoin functionality into its online accounts so users can check their BTC holdings.
- Smart Dubai partners with Consensys and IBM in Blockchain initiative
- The European Parliament tasks the European Commission to establish the Blockchain Observatory, “in order to build up technical expertise and regulatory capacity.”
- The United Nations Research Institute for Social Development and Economic Council for Latin America and the Caribbean explore the potential for blockchain to stabilize areas of economic turmoil.
- At least eight states within the United States are pushing legislation for blockchain adoption including: Arizona, Illinois, Delaware, and New York.
This is to say nothing of the enterprise-level distributed ledger & cryptocurrency initiatives in other sectors like computing (IBM, Microsoft, Intel), insurance (Deloitte), logistics (Maersk), healthcare (Phillips, Oslo Medtech), and the many others.
Will it last?
While blockchain and DLT continue to spread, and interest from developers and users alike grows along with it, events like the recent GDAX Flash Crash and the wild swings in cryptocurrency value project an aura of unstable volatility to the uninitiated. The seemingly unending controversy around the ICO craze makes it difficult for entrants into the crypto world to judge the legitimacy of projects, and infighting around the scaling debate, often highly technical and emotionally charged arguments, portray the community as divided and disorganized, leaving these newly interested members unsure of which talking heads and news outlets to trust.
These factors make joining the blockchain movement difficult, even with the streamlining of other on-ramps (buying, holding, trading, using cryptocurrencies). But more institutional buy-in and support gives people known quantities to latch on to in the form of familiar names. It seems like we’re approaching the critical mass of blockchain-based applications, necessarily spread across multiple industries, required to reverberate throughout society beyond the tech savvy early adopters.
-And then after the banks, governments will come. Then other governments will come.