In a recent post I took issue with a poorly researched article that dismissed the potential of Blockchain in international development after a short and superficial research.
It has been pointed out to me on twitter that I may have been a bit harsh and that in fact, many of my fellow blockchain enthusiasts carry a lot of the blame for the negative perception in that article and beyond.
And you know what, the twitter critics (twitics?) are right. The sad truth is that Blockchain businesses — weather they are building for International Development or not — come in two basic flavors:
- Marketing-first companies. These are the most common ones and, frankly, carry most of the blame for the blockchain’s bad reputation. These businesses are built around some high level ideas (“whitepaper”) and professional looking teams of advisers. They have no product or tech to speak of. Yet it is hard to go to any conference without running into several of their senior team speaking, attending panels (manels?) and selling hard. Awash in cash from the last bull run/ ICO, they churn out content with high production value but thin on anything concrete and feed a gigantic hype machine, supported by get-rich-quick people on telegram, twitter and beyond. This strategy works in the short term — they are given exposure in mainstream media and, I assume, occasionally they get called by researchers for details.
- Then, there are the Product-first companies. These focus on solving specific problems in their industry/ for very specific segments of users. The teams are mostly engineers or product/ industry inside people who plow every day at optimizing features and solving highly specific user experience problems. They don’t worry about scaling just yet and definitely don’t have the time or the cash to attend conferences or purchase eyeballs on the internet and in lifestyle magazines. Conveniently they don’t receive the calls of researchers. In the unlikely case that they get exposed to them, most people struggle to understand what they are building and why. Their success eventually depends on eco-system growth and shifts in user behavior and tech standards and they seem to be making no progress in the short term.
This is all part of the journey, and every wave of exponential technology had the two models. Every single time, the marketing-first model disappeared and the product-first model prevailed. (For reference, those old enough to remember, pets.com was a marketing-first company that had huge exposure and an insane valuation in the late 90s, at a time when, a small company in Seattle called amazon was quietly building stuff).
So if you are researching “blockchain for good” (or any blockchain-powered project, really) and need to pick one model, stick to product-driven companies and pass on the marketing-driven ones. History has showed that if there is a real need, the product wins over marketing in the long run.
How do you tell the difference?
Obviously, it is not so easy to tell the difference. But there are a few tell-tale signs that one can look for:
- Check out their communication/ social media. If the bulk of it is pictures of people at conferences, references to “our founders” at this event and “our CEO” at that event, you know there isn’t much going on there;
- Google their advisers. Do they evangelize the product & engage in conversations that show they are interested and knowledgeable in their own channels or are their own channels dominated by completely unrelated topics? If it’s the latter, move on — they probably get paid to masquerade as “advisers”;
- Are they building their own blockchain? This is such a big one that it deserves its own post. But for now, here is the skinny of it:
Why Private Blockchains are a red flag
What exactly is a private blockchain and why would anyone want one? Blockchains are clunky, rigid platforms. The main reason why any of us would put up with them is the fact that they are maintained by a community, safe from the control of any single entity. Since they are controlled by a single entity, there is no good reason why a private blockchain is any better than a SQL database. In fact, I cannot think of a single argument of why someone would build a private blockchain (slow, hard to scale, rigid) over a tried and tested centralized database (fast, resilient, easy to integrate, flexible). The only plausible reason is hype, which is why this is such a powerful give-away of marketing-first businesses.
“I’ve got this awesome idea for a platform. It’s like the internet, but it’s owned and controlled by a shady company”
Look at it this way: would you take seriously a company that promotes a product that requires the building of their own private internet? Or even the use of their own Facebook replacement?
The internet is full of small inefficiencies and quirks. Even if you have a vision on how to build a better one, from scratch, you’ll probably fail, mostly because the power of the internet is the very fact that it is not owned/ controlled by one single authority. A private internet sounds horrible, even if it works faster or whatever.
It’s the same with the blockchain: there are fantastic communities (NOT companies) out there building global blockchain infrastructure. Just like the internet, this infrastructure is quirky and may seem hard to scale. But, in 2018 these are truly decentralized and NOT controlled by any one authority — therein lies their power.
Be suspicious or anyone who is building their own, private blockchain.