The Rise, Fall, and Rise of Blockchain

James Ovenden
Mar 14, 2019 · 11 min read

Blockchain technology has now been around for over a decade, with the Satoshi whitepaper that started it all having celebrated its tenth anniversary on October 31 2018. There have been numerous twists in the tale during this time, with the hype around its potential going up and down more than a forgetful lighthouse keeper.

Today, it is a fixture in innovation and R&D departments across businesses, NGOs and government agencies. One of the earliest to recognise its potential in enterprise was Gijs Burgers. Gijs is a Founding Partner at WOCAP Digital Assets, a consultancy based in the centre of Amsterdam that’s focused on identifying and developing new business models around digital assets, often involving blockchain concepts. He builds on years of fintech consulting experience with big corporates, banks, payment processors, etc, and is a regular in Primalbase AMS, where he spends his time working alongside his business partner Maurits.

We sat down with him to discuss his career so far and how the blockchain space has evolved.

Gijs entered the blockchain space back in 2013, at a time when the majority were still unaware of the fledgeling technology and its potential.

“I started my Amsterdam consulting career at Innopay, a company full of weathered veterans in the fintech sphere,” Gijs explains. “Even for them, crypto was something relatively new. I wasn’t going to outsmart these guys within a reasonable amount of time, so I decided that this was something I could focus on. I started reading up on it and keeping an eye on the market developing. At a certain point, the company said ‘hey guys, how about you write this report and interview some people from the crypto sphere’. So that’s what I did.”

The report was titled ‘Cryptocurrency: A Revolutionary Technology.’ It concluded, presciently, that the focus of attention should be on blockchain rather than cryptocurrency. “It was about the technology underneath what we knew at that point only as Bitcoin and Litecoin. We were looking for the potential in there. That was not just currency.”

This was a new thing to say at the time, putting Gijs ahead of the curve. It wasn’t long before those in finance began to take an interest.

“At some point, you realise that you know more about this stuff than most other people. Companies started inviting me in to explain it to them. Based on previous experiences, at WOCAP we developed a vision of what role blockchain will play in the future, which we have further extrapolated.”

Today, blockchain is at an inflection point, with Deloitte noting that momentum is shifting from “blockchain tourism” and exploration, to the building of practical business applications. This is something Gijs has witnessed first hand, although he also notes the transition to the next stage is not easy.

“At first, everyone wants to know what this concept actually is,” says Gijs. “This gradually changes to ‘we want to try it, but we don’t really understand if it will be useful or not’. We would essentially come in and just ask clients a lot of questions about their current understanding and the potential for their business. When people actually think they’ve found a case that could work for them and they want to try it out, they call us to take a look.”

While many have dipped their toes in the crypto water, though, the majority of these have yet to really get wet. “For the majority of them, it stops after the experimentation phase,” explains Gijs. “The exception is really big corporations who have a dedicated innovation branch where it’s okay to have people work on it 24/7, the whole year round. Most of the time, though, companies would just be like ‘okay, well, we have no clue how to apply this’ or ‘we can only apply this if you change our entire core business model, and we don’t feel like doing that right now because the concepts or the technology are not mature enough.’

“From a consulting perspective, it is challenging to consult on the forefront of innovation. Really innovative start-ups don’t have the financial means to hire high-end consultants and accelerate their businesses, while big corporates would have the financial means but don’t have to reconfigure their entire business model right away: after all, they have a working business already. Although understandable, this means corporates mainly want to stay in touch with the new tech and business concepts but they do not commit to any haul-overs until they see they absolutely have to.”

The most obvious use cases for blockchain currently sit in finance, and it is where the majority of investment has been so far. The value of blockchain in the financial sector reached $1.9bn in 2017 and IHS Markit estimates that it will reach $462bn by 2030. However, its tentacles are spreading further afield and into a variety of other industries. For example, blockchain investment in the energy sector is expected to reach above $5.8bn by 2025.

This is something that Gijs has witnessed first hand. “When we started out, it was mainly banks,” he notes. “Then it started to spread to insurance and everything that is money related. I also saw it in logistics and hardcore IT/software.

“With blockchain, essentially we have finally managed to make digital things unique. Take, for instance, copyright laws: we have those in place, but do not prevent the copying of digital content. With blockchain concepts, we found a way to actually make things unique in a digital form. If you own one Bitcoin, that is literally one Bitcoin that you own — the only way someone else can own it is if you give it to them. If you look at how business works and how long supply chains work, for instance, it’s all about who owns which assets at what time and who can transfer those assets, which risks are involved, etc.”

However, the reality is that blockchain, in many contexts, is not a practical solution (yet). Gijs’ focus is on helping those interested in blockchain to see the technology through the lens of their business goals. “One of the biggest problems at the moment is that most people don’t understand what blockchain is or how you should use it. As a result, they forget their business goals. They go crazy with expectations and then they fall into this big valley of disillusion when their expectations don’t come true.”

Pharmaceutical supply chain is one example where it may not be as useful as many have proclaimed. “The issue in those situations is that, most of the time, the problem is not the technology. The problem is the physical supply chain and the risk of contamination. If you have one actor that can be bought, their entire supply chain might be compromised. Blockchain cannot solve that. It all comes back to whether it makes business sense. Is it providing additional benefits over the technology we already use? In those cases, you will usually figure out that it’s not the technology that’s your problem — it’s making sure that the agents that you have that are able to edit your systems are bona fide. In any case where you are dealing with a physical situation that is registered digitally, you need to mainly think of how you will bridge that trust gap between the physical and digital worlds.

Photo by Thought Catalog on Unsplash

“It’s different when you’re asking purely about something digital. So, a Bitcoin comes into existence in the digital world and it’s transferred in the digital world, so there’s no need for a gatekeeper there. In the physical world, most of the time your problems will be human-related. The blockchain is not an all-knowing solution to all your physical problems.”

However, while interest in blockchain may have risen in every sector, Gijs also sees evidence that hype is on the way out, though in the best possible way. “Right now, I think interest is actually falling again because everybody has tried it out, but only a few figured it out in a way that works for them. We’re over that hype cycle — people’s extremely high expectations have not come true within a very short timeframe and they’re moving on.

“I really think that what we have seen in the past year is beautiful. All the projects that didn’t have a long-term vision and a long-term mindset are failing right now, or they have already been discontinued. On average, it’s probably a good thing that the teams that were in it for the “quick money” are now gone. I can’t blame the teams that went for quick money, but I’m happy that it is now easier to find places where people are actually building something new with a long-term vision.”

“In the corporate world, everybody who was trying it out did their best and they’ve given their innovation departments two or three years of funding. They’ll continue doing that, because they just want to have the capability to understand the entire crypto sphere when they will need to. But slightly smaller companies, they’ve probably just put their teams on whatever is cool right now, like artificial intelligence. They’re just done with blockchain for now, and that’s okay. Blockchain can change your entire business model. It’s not a lightweight option. It’s quite difficult for existing organisations to legitimise such a change to your architecture or to your business model unless you really have a good idea how to do it.”

None of this is to say that blockchain isn’t being used in the world today. Gijs points to a couple of examples he really likes, including ourselves.

“Primalbase is actually a really good example. It’s basically a new way of managing economic rights,” he says. “Primalbase used the advent of blockchain to, on the one hand, get capital to build something and, on the other hand, immediately connect a bunch of people to that capital in a way that is very useful. I think it’s beautiful that this place exists and I have tokens. I walked in the Berlin office and I was amazed. People supported this idea and as a business model, it works and you have solved the problem of getting capital upfront. It’s just a different paradigm. I can sit here every day and enjoy this office.

“Furthermore, the business case was clear for us: having lifetime access to beautiful offices in AMS, BER, SIN, NYC and LDN makes a lot of sense. Besides that we can use these locations ourselves, we can also rent out our economic rights to make an extra buck. For us it worked out really well.”

Gijs also points to another application that is fast being recognised as an area with real potential for blockchain: decentralised computing. “Right now, you have Amazon, Google and Microsoft, and they own very big centralised data centres where they store your data, and they do some processing if you need processing. One of the things that crypto or blockchain can solve is decentralising the huge need for processing and data storage we have in the world. For example, there are a number of companies working on what is known as ‘fog computing’.

“What these companies try to do is say, hey, look at the world right now: you have a telephone, you have an iPad, you have a MacBook, and maybe you have a computer somewhere. Your mom has a bunch of devices as well, maybe your fridge or your watch. Basically, 99% of the time you’re using only 1% of their total computing power.

“That’s just a bit of a waste. We need to capitalise on power we’re not using right now. And how about we capitalise on it in such a way that we don’t have to do it centrally? Let’s use your watch, your fridge and your computer — anything that’s not doing anything particularly interesting right now to render some 3D image for a guy in India. Why not? I mean if that guy doesn’t have a very powerful computer, why shouldn’t he be able to use all the unused processing power in the rest of the world? Several projects are technically figuring this out and that might mean at some point if they succeed they could be competing with Google or Microsoft on certain web services.”

Ultimately, there are many applications where blockchain can make a difference — companies just need to be patient and think hard about whether it aligns with their business goals. Gijs points to recent history and how long it has taken for other technologies to be adopted, for society to build up the organisations and platforms on which we can then build the new organisations and platforms of the future.

“One of the examples I often use is, I’m chatting with you now on a recently-built computer, and the underlying operating system is still the same system that we used in 1972. However, I have more than two colours on my screen right now and I can see your face instead of just letters, and there’s internet and stuff like that. It took us 50 years to get to this point and we had to build on each other’s work to get there.

“That’s the same thing right now with everything that’s blockchain. It’s just the beginning and it will take time for society to absorb all the ideas and get to a level where many people are able to build on the various networks that are available — like Ethereum, Bitcoin or one of the many alternatives currently present.”

We are still at the start of the blockchain journey and there is a long way to go. It is, however, filled with promise.

If you’re a CEO/CIO/CTO at a corporate business looking to better understand why, how and if you should adopt the technology, be sure to get in touch with Gijs.

If you’d like to join him and other leaders from across the tech sector in a Primalbase office, check out our workspace solutions and find out what we can do for you.

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