The Future of Blockchain as Seen by Those Shaping It
At Primalbase, our community is made up of those building emerging technology. We made it our mission to create workspaces in which like-minded people can share their work, collaborate, and push the boundaries of emerging tech forwards. One of those is Peter Tran. Initially becoming interested in blockchain in early 2017, Tran initially invested in Bitcoin, Litecoin and Ethereum. Now, he is focusing on tokenised traditional assets — real estate, art, currencies, debt — as well as other ‘tangible’ utility tokens, like the Primalbase token.
After founding and operating a Vietnamese street food startup in Sydney, Australia, Tran moved to London to work on the operations side of Primalbase. We sat down with Peter to talk all things blockchain, from the key challenges going forward, to the areas that he believes the community will most closely focus on.
Regulation
The rapid development of blockchain technology has been such that it has left regulators struggling to keep up. Blockchain falls into a difficult bracket, in that it is in use yet constantly evolving, forcing policy-makers to legislate for the present as well as the immediate and long-term future.
“The utility token projects that launched in 2017–2018 are still in a grey area when it comes to compliance with securities laws,” Tran says. “The SEC and FCA are only now starting to speak up but have yet to make definite rulings. My personal belief is that most are illegal securities. Regardless of the token’s utility, the intent and nature of the sales were securities-like in nature, but do not offer the investor protections or benefits of traditional securities. Sounds like the worst of both worlds!
“The challenge for those companies now is to work with legal teams and government bodies to ensure they are compliant (if not before). The challenge for new blockchain/crypto startups is that it is now more costly and time consuming to launch a project if they are going down the security token-offering path.”
User Experience
Central to blockchain’s entry into the mainstream market will be its ability to be accessible to those that aren’t naturally technologically savvy. Many people expect the most groundbreaking blockchain-based products to be those that are seamless, so much so that people won’t necessarily know that the product they’re using involves blockchain at all. For Tran, bridging the gap between the technology and the average user is one of the key challenges going forward.
“The second challenge is user experience and defining customers,” he says. “Blockchains in their current state are slow and require some technical knowledge to use. There are very few DApp users for this reason, but also because few companies are able to identify who their target market is and fail to cater to them. For now it seems like the users are speculators and gamblers which some would argue is not a real use case.
“It also seems that only centralised companies have got it together when it comes to gathering users in the masses (Coinbase and Binance). Building their products on centralised databases, and not worrying about blockchain performance (as much) has allowed them to focus on the user experience. When it comes to users, speed and performance still seems to win, over security, decentralisation, transparency, anti-censorship ideals etc. (possibly because current blockchain users are speculators/gamblers?) However, these are the core concepts of this technological movement that make it attractive.
“Hence, the challenge will be to find a balance between usability and the above mentioned blockchain/cryptocurrency ideals.”
As with any major emerging technology, the underlying theory is developed first, made functional and, crucially, scalable. Following that, user experience can be the core focus. Blockchain projects will fail just as startups do in any industry — it will be those that make their projects genuinely usable with no prior expertise that thrive.
Committing to Decentralisation
Many would argue that any form of centralisation within the blockchain field detracts from the technology itself. It is in this respect that a lot of the more popular exchanges fall down — fully decentralised exchanges are the next step, according to Tran.
“High performance decentralised exchanges are going to be key,” he says. “10 years in, and nearly 5 years since Ethereum, it makes little sense for us to still be trading on centralised exchanges when it goes against most of what the industry stands for. Centralised exchanges like Binance and Kucoin are now gearing up to launch their decentralised offerings. New players like Nash Exchange have figured out non-custodial solutions for trading Bitcoin. They also use state channels to complete cross-chain trades with the performance and user interfaces of what we are used to in centralised exchanges.
“Previous attempts by other decentralised exchanges used wrapped Bitcoin and other tokens but this often relied on a third party to redeem the wrapped Bitcoin for actual Bitcoin. Many would say this is centralised. Current decentralised exchanges either use the wrapped method or trade on-chain, which is extremely slow and often technical as users would need to set gas prices as well as connect their wallets using a long string of alphanumeric figures (private/encrypted keys).”
Tokenisation is the Future
When they hear the word blockchain, most people think of cryptocurrencies. Yes, there is huge potential for overhaul in the established financial institutions with the introduction of crypto, but this is only half of the story. Tokenisation of assets, varied in their form, has the potential to change how we think about and interact with ownership, utility and governance. We asked Tran about the potential inherent in tokenisation:
“This now seems to be a question of when, not if,” he tells us. “Many can now see the benefits of tokenised assets: increased transparency, immutability, access, liquidity and therefore faster settlement times.
“Investment-seeking blockchain projects ideally would be working on solutions that put blockchain and all the technical details in the background and offer an investment-grade security token over a prepaid use voucher disguised as a utility token. There are many projects now that have tokenised property ownership (a quick Google search will show many results including one that launched on Indiegogo), currencies (stable coins), and many are working behind closed doors on tokenising commodities, bonds and debt instruments.
“Tokenising these assets allows for greater programmability/automation and so traditional markets can experience a decrease in settlement times. For the user, tokenising these traditional assets means greater divisibility, allowing retail investors from around the world to own small portions of shares, and if they are tokenised on public blockchains, increased access and 24/7 trading.
“The tokenisation of assets is what will bring institutional money, if it hasn’t already.”
