Earlier today, De Volkskrant — one of the most respected newspapers in The Netherlands — published an extensive article on the seemingly stagnant state of blockchain initiatives in the country. By the time the fifth person asked me about my reaction on the article through WhatsApp, I felt obliged to get my writing-game on again and share my thoughts. I give, since I was the guy rambling about blockchain last year!
The article describes how the gloom of blockchain tech caused a rally of developers, visionaries and media announcing The Blockchain Revolution and The New Paradigm. It describes how both private organizations and governments started initiating blockchain teams, experiments & investing vigorously, feeding the hype in the process. The article points to a study on blockchain intiaitives in the country and their current state. According to the study, 9 out of 10 initiated blockchain projects never got past the experiment phase.
The article claims that a lot of projects are not aimed at solving a problem, but are merely initiated because CEOs want to do “something with blockchain”. I concur: This is definitely something I see a lot in my work at Kryha, where we help organizations in exploring and building enterprise blockchain applications. “Blockchain” became a buzzword, up there with AI, Big Data & Drones. Some of the design sprints we’ve ran, produced some very valuable concepts that absolutely wouldn’t require the use of blockchain technology. We’ve even ran small workshops that resulted into absolutely nothing feasible. I merely see this as a byproduct of the hype and the collective responsibility of the blockchain space to say NO to projects lacking a valid use-case for the tech.
It is our collective responsibility to say NO to projects lacking a valid use-case for the tech.
For blockchain projects that DO try to solve a valid problem, the article states that these projects mostly run into problems related to scalability (speed, transaction throughput) and privacy laws. These are indeed the two main contraints of the current state of the tech. The article illustrates how one projects tried to solve these issues by using a private blockchain instead, thus drastically decreasing the degree of decentralization and defeating the purpose of using the tech in the first place. ¯\_(ツ)_/¯
Scalability is by far the hottest topic in the blockchain space. We’ve seen with Bitcoin that blockchain platforms which aren’t built for scale, tend to run into nasty problems in the form of long waiting and skyhigh transaction fees. The scalability problems that plague blockchain platforms primarily originate from the consensus protocol used(eg. the way the network agrees on the valid dataset). Bitcoin uses the inefficient though revolutionary Proof-of-Work protocol, but A LOT of different consensus protocols have been invented since and are either available or in active development. Just to name a few; PoS, DPOS, PoA, dBFT, PBFT & PoKW are all different implementations of consensus protocols with varying characteristics, all trying to tackle the scalability problem. The Ethereum foundation — among others — are also working on a promising set of both layer 1 and layer 2 scaling solutions. In addition to the above, the dramatic scalability properties of today’s (pilot) blockchain applications can be attributed to bad architecture design. This is also why we’re platform-agnostic at Kryha.
Even more complex than the above is complying with privacy laws, especially the notorious GDPR in Europe. Data privacy regulation is very much needed in a world where we’re being eavesdropped by our own smartphones for advertising purposes, but GDPR is a classic example of regulators not involving technologists. The “right to be forgotten” requires for personally identifiable data to be removable at all times, even if hashed or encrypted. This is a problem, since we can’t erase data from a blockchain. At Kryha, we constantly run into this while conceptualizing blockchain applications. Sometimes there’s a workaround (like submitting data pointers to the blockchain instead of the personal data itself) and sometimes there simply isn’t. One thing to look out for is the development of blockchain platforms that leverage TEEs (trusted execution environments). Projects like Oasis (very promising) are working on privacy-first blockchain platforms to enable trusted computations over sensitive data, amongst other use-cases.
Early-stage blockchain projects may have ran stagnant, but the blockchain space hasn’t.
In the shadows of the crippling cryptocurrency bear market cycle, very promising projects and protocols are being developed. Technologies need a long time to truly develop, which isn’t something our exponential society is comfortable with. Blockchain technology isn’t just about a new way to structure data; it signifies a new way to look at trust in our digital world. If done right, it could end the era of data oligopolies & mass privacy violations.
Blockchain will have it’s revolution, but let’s all give it some more time. For now, all we can do is BUIDL, HODL and keep both feet on the ground.
A bit about me: I got involved in the blockchain space early 2017, had my share of trading cryptocurrencies and I’m now proudly part of Kryha. At Kryha, we help organizations explore and build enterprise blockchain applications, for clients like Shell, KLM, Bosch and the Dutch Ministry of Justice & Security. We do a lot of research ourselves and try to stay on top of what’s new in blockchain, so that we can use it in our enterprise solutions. Interested in what we do? Feel free to send us an email at firstname.lastname@example.org