The Future of Blockchain is Boring
Last month, Bitcoin became one of the hottest investment opportunities of the year. Its price smashed through $20,000 USD per Bitcoin before crashing back to earth. It currently sits around $8,000 USD. Speculation is rampant about where it will go next.
The future of blockchain — the technology behind Bitcoin and other virtual currencies — is not about the wild and exciting news of instant crypto millionaires. It’s not about the science projects or the “moonshot math” associated with the complexity of the technology.
When we step back and look at where the crypto world is going, we can see that the future of blockchain is boring.
The Real Winners of the Original Gold Rush
The California Gold Rush was one of the greatest periods of speculation and investment in modern history. From the time the first gold was discovered near Coloma in 1848 to the end of the rush in 1855, more than 300,000 people migrated to California in search of riches. Most of the fortune seekers were unsuccessful, but those who provided support services to the 49ers did very well. It’s often suggested that those who were selling pickaxes were the biggest beneficiaries of the rush.
What gets hidden by this idea is that the real winners of the gold rush were the future residents of California. In the space of less than a decade, the population of the region swelled from 1,000 to 30,000. California became the first region to go directly to statehood without becoming a territory first. The human capital that poured into the nascent state demanded human and physical infrastructure. Roads, sanitation and trade infrastructure rapidly emerged. This new infrastructure became the beta platform for what has become one of the largest and most dynamic economies in the world.
The future of blockchain technologies looks very similar. The current hype around initial coin offerings (ICOs) is a modern version of the discovery of gold. Past the prospectors and cryptogeeks, a well funded industry of tool-driven ventures has emerged. Cryptowallet makers and cryptocurrency exchanges have been the early beneficiaries of this rush, selling the modern versions of pickaxes and tents. As the idea of Bitcoin and digital currency seeps into the global consciousness, the real, boring work of building the infrastructure of the blockchain world has already begun.
Building an Infrastructure for Emergence
This infrastructure build out is different from the early ideas about how blockchain would change the world. Early on, the conversation centered on the death of financial intermediaries and the emergence of anonymity-focused global digital currencies. Today, it’s more about identifying the kinds of use cases that leverage the unique functionality of blockchain technologies to provide real world results.
Take CryptoKitties for example. You may have heard of the Ethereum-based game that allows users to breed and create unique “digital cats.” Launched late last year, it quickly flooded the Ethereum network with transactions for its unique digital kitties. On the surface, it’s another hyped-up crypto play, with digital cats selling for as high as $120,000 USD.
But CryptoKitties is so much more than a silly game. It’s an experiment in using the blockchain to manage “digital scarcity.” BraveNewCoin author Alex Lielacher said it best: “The more unique a crypto kitten is, the more scarce it is and thus the more valuable it is perceived to be by other users. Hence, through the introduction of digital scarcity, a new economic good in the form of virtual cats, has been created.”
It’s really the perfect prototype for any innovator seeking to vet and de-risk one radical application of blockchain technologies. Namely: Is it possible to put a stop to unlawful duplication of digital content?
CryptoKitties is just one example of where the real opportunity lies in the blockchain space: identifying the early experiments and crazy ideas that are perfect vetting grounds for proving out the base technologies, and then applying these technologies to specific business use cases like optimizing agricultural infrastructure or asset management.
Assessing, de-risking, testing and assessing again. That’s how we’ll build out the future of blockchain: one boring step at a time.
