Vitalik Buterin, the founder of Ethereum, recently wondered out loud:
"How many unbanked people have we banked? How much censorship-resistant commerce for the common people have we enabled? How many Dapps [distributed applications] have we created that have substantial usage? How much value is stored in smart contracts that actually do anything interesting? How many Venezuelans have actually been protected by us from hyperinflation? How much actual usage of micropayment channels is there actually in reality?”
Has blockchain technology been utilised to deliver the lofty promises made after the Bitcoin white paper was unleashed? Is it too early to ask this question? Are we still in the Precambrian stage of the development of the Internet of Value?
There are certainly some developments in the right direction:
Global awareness of the blockchain, the Bitcoin, Ethereum and alt-coins has increased steadily over the last year with the prime news being the stratospheric rise of the price/value of Bitcoin. Content around the blockchain topic is being created at a steady pace on multiple fronts. Institutions of higher learning are offering courses to meet the insatiable desire to learn about this emerging secure public ledger technology.
Levels of activity in utilising blockchains have increased tremendously. Probably, not enough to justify the 700 billion current market valuation. There are currently more than 1,000 cryptocurrency tokens as listed in CoinCap. Eventually, when the froth becomes unsustainable, there will be a massive sell-off of many of these cryptocurrencies. Probably, a quarter of these may see the light of day after the crypto-apocalypse.
Financial institutions have transitioned from fearing the new tech and gone on to co-opting the ledger technology to simplify their settlement transactions with federated and consortium blockchains. In this process, their operations have become more secure, quicker and a lot more profitable.
National regulators have continued to issue their warnings - caveat emptor (buyers beware) - while they monitor the innovative technology that is upending several sectors. Except for highly controlled societies like China and Russia, most countries are minimising stifling regulations so as to not impede the technology that may deliver on their promises to democratise financial transactions. Countries that successfully work with blockchain based public ledgers may become new global financial centers. This is certainly one of the ambitions of tiny nation states like Singapore.
Established companies like Kodak are attempting to boost their reputations and their stock prices by declaring blockchain and cryptocurrency initiatives. Some of these attempts may be short-lived, if these initiatives do not deliver on their promises and shareholders ditch their stock.
The emergence of Initial Coin Offerings (ICOs) has dented the world of venture capital. Many of the ICO backed startups and programmes are grappling with governance and execution issues. Many of them may fail and this innovative form of venture funding may get a bad reputation when token holders fail to realise their dreams of highly inflated returns on their speculative token holdings. The exception to this is Ethereum. Ethereum is developing as the first dependable platform for the development of distributed applications. With upcoming forks or changes to the blockchain, some of the recent performance issues - with the CryptoKitties craze - may be better managed.
The interim summary is that we are still some way off from declaring that blockchain technology has changed the world. We need to be prepared to weather some massive (not if but when) volatility in 2018 as we gradually head into our crypto future. I look forward to crypto innovations that improve the lives of the majority on the planet to experience an enhanced sense of well-being, happiness, optimism, prosperity and progress.
Image Credit: Photo by Ricardo Gomez Angel on Unsplash
