Beyond the hype: What’s next for blockchain?
Has enthusiasm for blockchain truly waned or is the technology just getting started? After turbulence in the crypto markets, the public blockchain has taken a beating. But the experts at our Focus | Blockchain event aren’t counting out anything
Has enthusiasm for blockchain cooled permanently? Not quite, according to panelists at our recent event dedicated to blockchain. There’s optimism, even with the awareness that while distributed ledger technologies are slowly integrating into enterprises, public blockchains, the token economy, and decentralized approaches are a long way from mass adoption. At Focus | Blockchain on March 4, Craig Wilson, General Manager of the Digital Future Lab, brought together an all-star panel — ConsenSys Labs’ Shawn Cheng, Kadena’s Marie Leaf, Battlestar’s Adam Carver, and Notation Capital’s Nicholas Chirls — after a keynote by IBM Blockchain’s Ricardo Olivieri.
The single source of truth
Kicking off the evening, Ricardo Olivieri, Blockchain Solutions Architect at the IBM Blockchain Cloud Garage, keynoted with ‘An Introduction to Blockchain for Business’. The Blockchain 101 presentation offered the audience of VCs, tech recruiters, software engineers, developers, fintech startups, and students an opportunity to immerse in blockchain basics.
Ricardo started with a brief refresher. Blockchains consist of business networks, assets, and ledgers. Business networks are a group of entities that transact goods and services; assets are anything digital or physical capable of being controlled to produce value; and ledgers are a system in which transactions or contracts are digitally recorded. The blockchain is a shared, distributed ledger technology that enables participants in a business network to transact with high levels of trust and transparency — it offers a single source of truth.
There are public blockchains and there are private ones. A public blockchain is familiar to anyone following the volatility of bitcoin and cryptocurrencies — the open networks in which participants don’t know with whom they’re transacting. In private blockchains, participants know the identity of all members upfront.
Blockchain, the industry disruptor
Not surprisingly, Olivieri said that for most enterprises, private blockchains are a good fit — provided they meet 4 requirements: identity transparency; agreement on what is shared and stored in the ledger; privacy; and transaction endorsement.
Olivieri also offered a live blockchain demo that showed the simplicity and speed of the system. “Organizations today can disrupt their industries by using blockchain technology and streamline the exchange of assets,” he said. He cited IBM Food Trust as a private blockchain example that records each step produce takes from farm to table — farm, processor, distributor, retailer — to show the value of understanding where in the supply chain an item, say romaine lettuce, may have been exposed to bacteria. “Blockchain technology can help prevent people getting sick,” Olivieri said.
The trilemma of blockchain
One of the biggest challenges facing blockchain technology is its ‘trilemma’: the choice between scalability, decentralization, and security. The confluence of technical barriers hinders the trust necessary for mass adoption or business applications. Shawn Cheng, Partner at ConsenSys Labs — which invests in decentralized technologies — sees the emergence of a hybrid class of investors, those who can invest like hedge funds, buying and selling at will. “There’s a growing interest for financial and tech-focused use cases for blockchain. Cryptocurrency and blockchain can offer a better way throughout the life cycle of a company.”
Nicholas Chirls, Founder and Partner, Notation Capital, tries to ignore the boom/bust cycles of cryptocurrency investing in favor of the grander technological changes looming. As blockchain passes its proof of concept phase and into real-world applications, there will be moves to identify industry applications that will be the best use cases for the technology, and Nicholas is eyeing that landscape.
In that vein, Marie Leaf, Product Lead at Kadena, shared the example of a health insurance company that used a pseudo-consortium to manage patient-provider data. “I like use cases of young companies and data sovereignty issues where you own data,” she said. As a centralized arbiter, or mechanizer, of trust, Marie believes blockchain will accelerate in emerging economies with trust issues.
Proof of stake and proof of work: Pros, cons, conflicts
A moderator question addressed the issue of proof of stake versus proof of work within the blockchain developer community. Proof of stake refers to owning coins and posting them as collateral, while proof of work is a compute requirement that must be performed in order to add to the ledger. Marie said Kadena uses a proof of work influenced model, and is optimizing for it. Her criticism of proof of stake is that it is not subject to money transmitter license laws, and it hasn’t been put through enough rigorous testing to be considered completely secure.
“Proof of stake is fast,” said Adam Carver, CEO, Battlestar Capital. He also asserted the importance of open networks and standards within blockchain development: “If you want to jump into Google or Facebook, it’s impossible — you can’t participate other than buying the stock or working for the company.”
So what does the investing in blockchain post-hype look like? Nicholas, for one, is a fan of open source projects, like Lightning, where people are improving the code base and advancing the technology. “It’s becoming more difficult to invest in digital assets as a traditional VC firm,” he says. What’s indisputable is that blockchain has us investing in an entirely different way — it’s an exuberantly participatory experience. It has democratized the way the average person invests in technology — even as this comes with high risks. For now, it remains among the most controversial of public-accessible technologies. The opinions are diverse, the discussions are heated, the future is varied.
Words: Tobi Elkin (firstname.lastname@example.org)