Disclaimer: This is not financial advice. I am not a financial advisor. What follows is my personal, subjective, biased opinion.
In 1989, Tim Berners-Lee took CERN’s internal network of hypertext on various computers, added the Transmission Control Protocol (TCP) and domain naming, and thus invented the world wide web as we know it.
Ten years later, the technology was still rudimentary at best. In 1999, fewer than 300 million people had access to the internet, less than 5% of the world’s population at the time. I was in third grade. One of the lucky few, our German internet provider billed by the minute. Whenever I signed on, a big, green timer my dad had installed showed me how much of my 30- or 60-minute budget I still had left. With a glorious 56k modem, page loading wasn’t fast either, and at 7 kB/s, forget downloads.
Once again: That was the internet ten years in. Today, as we’re closing in on 30 years of the commercial web, we’re just about to reach 50% global penetration. Yes, the progression of the internet is still a slow, meandering process. As it always was.
2018 will mark the tenth anniversary of the publication of the Bitcoin white paper and therefore places blockchain technology in a stage equivalent to the internet’s 1998. True, innovations now diffuse faster than they used to, but our expectations should turn centuries into decades, not years into days. And yet, with Bitcoin’s entrance on the mainstream stage in 2017, it feels like blockchain should’ve solved all our problems already, doesn’t it?
Well, it hasn’t, because blockchain adoption will follow the same, slow trajectory of adoption all new tech goes through. Right now, several obstacles prevent this revolutionary technology from being as integrated into our lives as the internet. Here are the top 7 that I see.
1. No Universal Use Case
Borderless, close-to-free payments, financial anonymity, impossible-to-rig elections, universal authentication of goods, un-hackable data storage, verifiable crowd predictions, accurate public health records, ensuring charity fund distribution, yes, the list of potential use cases — potential problems the blockchain could solve — is endless. But that’s a problem as much as it is an advantage.
Since there is no obvious, primary application, we won’t all adopt blockchain via the same path. Bitcoin just happens to be the first and largest and it chose the currency approach, but even that gets debated all the time. Should it be a means of payment? A store of value?
Eventually, we’ll all use something that relies on blockchain. But that something won’t be a web browser or cell phone for everyone.
2. Ease Of Use
Right now, if I want to send you 0.01 ETH, I have to:
- Go to the MyEtherWallet website.
- Triple check it’s the correct one, and not a phishing site.
- Upload a file, enter a long string of letters and numbers, or a sequence of unrelated words.
- Enter your unique address, which is yet another string of numbers and letters.
- Set not just the amount, but also the maximum gas I’m willing to send with the transaction, including the price I’m willing to pay for it.
- Triple confirm that I want to send the transaction.
- Watch it and wait to see if it goes through.
That’s way too many, way too complicated steps. Yes, I’m a nerd and I don’t mind, but the majority of the world isn’t and they do. PayPal now has a link structure with which I can tailor a custom link for you to send me any amount of money with two clicks. It looks like this:
That’s how easy sending cryptocurrencies needs to be, or rather will be, by the time everyone uses them to pay for coffee or reimburse their friends.
When you were using a computer to crunch some numbers in the 40s, 50s, 60s, or even 70s, it was hard to hide the fact you were doing so. Why? Because you needed to rent an office to put it there.
Now, IBM makes computers that are smaller than salt grains. They’re included in anything and everything, hidden from view. Your phone, your passport, your light switch at home, everything runs on processing power. Similarly, everything, besides half of humanity, is connected to the internet. Yet most of us only have a vague idea of how it works.
That’s because in order to use technology, we don’t need to know what powers it, let alone realize a certain technology is in place at all. We don’t need people wearing “I love blockchain” shirts and explaining it to all their friends, which are then weirded out by it. Don’t get me wrong, that’s a noble effort, and whoever shows interest, do tell them, but most people don’t want to change.
They don’t want to ‘adopt,’ they want to live their lives. The trick is to make the change so subtle they don’t notice it. Thus, what we ultimately also need is blockchain to be so invisible in easy-to-use applications that we can skip the explainers and go right to “yeah, it’s on-chain, whatever that means.”
4. Ease Of Setup
The internet may be everywhere, but whoever’s wifi you hop onto, they had to set it up first. Luckily, it’s only plugging in a few cables and turning on a box. Or calling a guy. Blockchain applications need the same plug-and-play infrastructure in order for the many ideas we have for using them to come to life.
Right now, you need a dedicated team of seasoned developers to potentially even learn new programming languages, then crank out a custom-coded solution. There’s no tap-here-to-start-tutorial and no software development kit, but eventually, there will be. Several projects are already working on this.
The only way blockchain innovation can reach critical velocity is if the barrier of entry is low enough for enough people to take a swing at their ideas.
Much like downloading a video in 1998 would’ve taken me days, transferring tokens via a blockchain isn’t exactly fast these days. With standard speeds of 1–5 transactions per second (TPS), current major blockchains like Bitcoin and Ethereum have a long way to go. Confirmations can also take anywhere from seconds to hours to show up.
While there are many alternative projects concerned with the issue of scaling have already launched development, most of their claims regarding thousands, hundreds of thousands, or even millions of transactions per second fall utterly short in real-world conditions. Old, but well established companies, like Visa, easily handle several thousand TPS, with peak capacity going up to 24,000 and more.
Since blockchains rely on the internet to function, chances are we’ll see the same seesaw we had with the early web for a while: lots of people log on, sites crash, infrastructure is upgraded, retested, and so on and so forth.
6. Energy Consumption
I like drinking coffee while I write. It’s my ritual. But whenever I take a bio-degradable paper cup at the college cafeteria, someone gives me a hard time for not taking a mug and drinking it right then and there. That’s how environmentally conscious my generation, the millennial generation, is.
That means for us, when a single crypto network’s annual energy consumption is lodged somewhere between Greece and Algeria, that’s a problem. And while there are ideas for different consensus algorithms that could potentially solve the problem, like proof of stake, they come with other tradeoffs, like a less secure network or one that’s more prone to centralization.
Until Elon figures out a way for us to be 100% on renewable energies, we’ll have to keep thinking about how we can reduce how much power blockchain systems need. Especially if they’re supposed to run anywhere and everywhere.
I’m a village kid. Where I’m from, people say: “What the farmer doesn’t recognize, he won’t eat.” Most folks are like that. They need the pressure of potentially falling out of the majority before they’re willing to try something new. And whether you like it or not, regulation in the crypto space will accelerate this process tremendously.
Rules, guidelines, codes, these are all like onramps on a highway. They give people a chance to funnel in without much perceived risk. People shouldn’t be tasked with judging which out of 17 different coins for the same purpose is legit, or which exchange will still open shop tomorrow, or worried about losing their investment because of some scam fork.
The only way for crypto to go big is to go legit. The path to mass adoption leads right through regulation, so the faster it comes, the better.
Give It Time
Blockchain is in fourth grade right now. It is a mere ten years old, so it’s going to suck for a while. That’s only a problem of perception, however, because the truth is we’ve always used things that suck and we always currently are.
Cars sucked for a long time. So did planes. Game consoles, TV, printers, telephones, mobile phones, tablets, the internet, we stuck it out with all of these, until they eventually caught up. It is only in hindsight that it feels like we one day turned around and everything was amazing, easy, and fast. But then find the next thing that’s slow and clunky.
Right now, that thing is blockchain. And whether you complain along the way or not, you’ll do what you always do: give it time until it gets there.