What I learned at the first Penn Blockchain Conference
One of the many who missed the opportunity to earn a quick million from the recent cryptocurrency boom, I was both skeptical and curious when I entered the first Penn Blockchain Conference last Friday. To the credit of organizers, the conference attracted high-quality speakers at the forefront of Blockchain development.
By the end of the day, I was impressed by the enthusiasm of the speakers. Most emphasized the potential of Blockchain to change the world, speaking of it as a “Web 3.0” and comparing its current state to that of the Internet technology in 1994.
I particularly enjoyed the keynote speech by Ari Paul, CIO of BlockTower Capital, a cryptocurrency investment firm, who presented his view on the industry and shared advice on how MBAs can contribute to the space.
Below are my notes from the speech:
Despite the recent hype, only 1% of the world population has ever purchased cryptocurrency
Now there are only 60–70 million people who own cryptocurrency. Most of them purchased the currency for speculation and only 3–5 million owners use it for other purposes, such as buying pizza (there is a well-known story on how someone spent what is now millions in worth of bitcoins on 2 pizzas in 2010).
Ari compared this situation to using email in the early 1990’s: tech was invented in 1971, but for the next 10–20 years its usage was limited to hobbyists and academic researchers. In the beginning of the 1990’s email adoption was less than 1%, but skyrocketed soon after that.
Underdeveloped infrastructure holds back rapid adoption of the technology
Using the Internet analogy, even though the applications of the Web are numerous, people were not able to enjoy its full potential in the 1990’s until sufficient infrastructure was set up. Imagine trying to stream Netflix using a dial-up internet connection (if you remember what that is).
The same is true for Blockchain tech now. Examples of Blockchain infrastructure limitations are:
- Low-bandwidth / slow speed
Bitcoin network allows only 14 transactions per second. Other cryptocurrencies suffer from the same problem. For example, quick rise in popularity of Cryptokitties, digital assets in form of cat pictures tradable with cryptocurrency, led to a dramatic slowdown of the network and rise of transaction costs.
- Unsafe and inconvenient cryptocurrency storage options
Contrary to fiat (normal) currency, which can be securely stored in the bank, there is no safe place for crypto. This means that each cryptocurrency owner must keep his own private keys and passwords by himself (usually on a piece of paper or a secured USB stick). If you lose your private keys you can never regain access to your crypto savings. Moreover, crypto owners attract criminals who try to steal or extort the private keys. Importantly, no custodian (storage) solutions prohibit access to the cryptocurrency investment for institutional investors, such as pension funds or insurance companies.
- Almost no comfortable user interfaces
Buying and selling cryptocurrency is still not for everyone. Though Coinbase dramatically simplified the way people start trading cryptocurrency in US, it is a rare user-friendly project. Crypto usage is still limited to a minority, precisely due to the complexity and inconvenience of the ecosystem.
Overcoming Blockchain infrastructure problems will create billion-dollar businesses
Like Googles and Amazons of the world, the companies that will solve Blockchain infrastructure problems or reduce barriers for customer adoption have a high chance of becoming the next unicorns. Cryptocurrency exchange Coinbase valued at $1.6Bn is highly successful because it built a user interface that is friendly for regular people.
Ari Paul envisioned that the next big winners in the space will be the Blockchain custody providers that will help retail and institutional investors “store” their cryptocurrency. Companies that will help to bring professional asset management solutions to the unstructured cryptotrading markets also have a high chance of benefiting from the quickly growing industry.
MBAs can contribute to and benefit from Blockchain industry growth
Many speeches at the Conference sounded like pitches for Penn students to join the space. Speakers noted that Blockchain companies need not only software developers, but also people with business backgrounds who understand marketing, who can build business partnerships and who know how to scale operations.
Ari Paul inspired MBAs to enter the space and think creatively about the pain points of current customers, as well as barriers for adoption of blockchain technology. As an example, he mentioned cryptocurrency’s price instability, complexity of transaction process and low adoption as some of the other obstacles existing in Blockchain. To illustrate how these problems can be solved, the speaker mentioned Telegram, which recently raised almost $1.7Bn through crypto token issue to create a blockchain meant to decentralize multiple facets of digital communication. He argued that Telegram can do a “growth hacking” by “air dropping” cryptocurrency to its 200 million users, thus significantly increasing the adoption of cryptocurrency in the world.
As seen, the keynote was highly optimistic about the Blockchain and crypto. As someone new to the industry, I was impressed by the energy of the speakers and their vision of the space. Furthermore, I was overwhelmed by the strength of Penn Blockchain community that unites professors and students of Penn Engineering, Penn Law and the Wharton School. I am definitely hooked and want to learn more about the growing industry.