Blockchain: the gap between the technology and the general public

There is much resistance toward blockchain technology caused by three major factors: a general misconception about the technology, the lack of effort from the involved people, and the intrinsic complexity of the technology. This article is trying to address these issues in details.

The views about blockchain technology are highly polarized between enthusiasts and opponents due to the lack of transparency of the technology and the absence of a coherent vision. As a result, the opinion of the skeptics easily influences mainstream media and society who don’t have a grasp on the technology. Blockchain is still in its infant stages and early adoption is always met resistance, the timeline of blockchain’s initial development starts less than 30 years ago. [1,4]

· The earliest work on blockchain was introduced in 1991, “cryptographically secured chain of blocks” in a published paper by Stuart Haber and W. Scott Stornetta.

· Shortly after that in 1993, Bayer, Haber, and Stornetta integrated Merkle trees to the blockchain as an efficiency improvement.

· In 2008 a paper named “Bitcoin: A Peer-to-Peer Electronic Cash System” was published by an unknown individual called Satoshi Nakamoto. The first distributed public ledger -Blockchain- was then conceptualized and implemented as a core component of the digital currency.

While these events were very crucial to the genesis of the technology, we present below, few other notable adoption-related events including the incident that changes the face of Ethereum (ETH) forever.

Blockchain 2.0

By 2014, Blockchain-based on smart contracts were introduced. The era of “Blockchain 2.0” started and it was a term referring to new programmable applications of the distributed blockchain database. The second-generation came with a Turing complete programming language that allows users to write more sophisticated codes, hence allowing the creation of “smart contracts”. This technology permitted the creation of automated and decentralized peer-to-peer applications known as DAO: decentralized autonomous organization.

The start of Institutional Adoption

In early 2016, the central securities depository of the Russian Federation (NSD), announced the adoption of the Blockchain 2.0 platform that would explore the use of the technology for automated voting systems. Since then, many industries have adopted the technology. For instance, IBM opened a blockchain innovation research center in Singapore in July 2016. In early 2017, the Harvard Business Review suggested that blockchain is a foundational technology and thus “has the potential to create new foundations for our economic and social systems.”

The 2016 Slock.it incident

“The Slock.it DAO” is the name of a particular DAO programmed by the team behind German start-up Slock.it — a company building “smart locks” that let people share their things in a decentralized version of Airbnb. The company raised far more money than its creators expected, $150m from more than 11,000 participants. Because of a vulnerability in the code, an attacker managed to drain millions of dollars and ended up causing the fork of Ethereum and the market to suffer for months. [5]

Believers and rivals of blockchain technology alike are taking the wrong approach. Believers are rushing recklessly without understanding the stakes in play; they are promising the world “a disruptive technology” that would solve all sorts of problems, but the technology is still in early stages of development and has many hurdles to cross, as is apparent by The DAO attack mentioned earlier.

We have determined three main themes related to the problem of the wide-spread adoption of blockchain technology: the multi-disciplinary nature, misconception, and opacity.

Multidisciplinary Technology: Blockchain technology is a complex topic, counter-intuitive at first glance and transcending even the disciplines talked about in this article. The spectrum of fields includes cryptography, software, distributed computing, and economics. It is not trivial to grasp the core idea. Thus, some commentators might not have a clear picture of the functionality of the Blockchain and its implications. One needs to be equipped with the knowledge to evaluate the merits of this technology. Blockchain promises to solve the way we treat, regulate, and maintain digital contracts, values, and transactions. The implications would impact economic, legal and even political systems. [1,2]

Controversy and misconception: There are many controversial ideas about technology. The biggest misconception of all is equating the blockchain technology and Bitcoin. The technology can lead to multiple innovations far-beyond the scope of any crypto. Some critics have argued that Bitcoin (hence Blockchain Technology because of the misperception) leads to a Ponzi and/or Pyramid scheme. In both schemes, there is a central operator who dictates some rules and guidelines; which is by definition, the complete opposite of the decentralized premises. Maybe the biggest controversy of all is the “bubble factor”. Since 2009, people have been arguing that Bitcoin is a bubble. At Demystify, we view Bitcoin as merely the first “successful implementation” of blockchain technology and we want to steer the discussion towards the most fascinating factor, which is the technology, beyond Bitcoin. [3]

Opacity and lack of resources: There has been a discrepancy between the advancements and innovations of the Blockchain technology and its understanding by the general public. This is due to a lack of determination from adherents to explain the technology to the mainstream. Quality documentation and resources are difficult to obtain and academic research is still in the infant stage. The first academic journal dedicated to cryptocurrency and blockchain technology research named “Ledger” was launched in December 2016. As is often the case with brand new technologies, many future applications of the technology might not be envisioned today. This fact should drive the passion of enthusiasts to create many new and interesting applications. [6]

In conclusion, our analysis shows the existence of at least three classes of position towards blockchain technology and cryptocurrencies:

· General public: absent or limited or hostile views

· Blockchain/cryptocurrencies followers: involved in one way or another with the lack of deep knowledge.

· Blockchain/cryptocurrencies enthusiast/experts: include active people in the field, developers, entrepreneurs…etc.

The adoption of the technology as of today is facing many challenges due to problems discussed in the previous sections. Therefore, at Demystify, we are developing a product-oriented approach to target the whole spectrum of people, regardless of their position towards blockchain currently.

[1] Andreas M. Antonopoulos. Mastering Bitcoin. O’Reilly Media, 2010.
[2] Richard Caetano. Learning Bitcoin. Packt Publishing, 2015.
[3] Pedro Franco. Understanding Bitcoin. O’Reilly Media, 2010.
[4] G Hileman. Global cryptocurrency benchmarking study. Cambridge center of alternative finance, 2017.
[5] https://www.coindesk.com/understanding-dao-hack journalists. 2017.[6] Albert Szmigielski. Bitcoin Essentials. Packt Publishing, 2016