Blockchain tech still 5-10 years away from true transformational impact?

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Earlier this week, Gartner announced that most blockchain technologies are still at least 5-10 years away from true transformational impact with the technology sliding into the “Trough of Disillusionment” on its Hype Cycle. Despite the dampening sentiment, the report also expresses confidence in the technology, citing many of the current developments taking place today that will allow for greater scalability, interoperability, and cross-chain functionality by at least 2023.

In light of this, industry leaders within the blockchain and crypto industries have shared their insights on the report, provided below for your easy reference. Should you be interested, I’d also be happy to facilitate a phone interview with any of the executives herein.

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Han Wen Chua, Grants Manager at Zilliqa, the first high-through put public blockchain to be built on sharded architecture, said: 

Blockchain’s trough of disillusionment is a boon for the industry and certainly, the technology’s promise has yet to fade. The problem lies with the initial idealism of the industry towards adoption, viewing blockchain as a magical sprinkler to solve all of the problems in existing industries. The reality, however, is that blockchain also contends with its own limitations. Today, there are many use cases which require the fusing of traditional and blockchain technologies to create value and bring impact to the lives of people. As a whole, it is a positive sign that industry projects are designing blockchain solutions with the pain-points in mind, instead of a blanket call for adoption.

Despite claims that blockchain technologies are 5 to 10 years away from transformational impact, in actual fact, the industry has been making a headstart in the tokenizing and lending space. It is in itself a transformational feat to observe digital assets being accepted as collateral which has not happened prior to the advent of the technology. In 1 to 2 years, we will begin to see the tokenization of illiquid assets such as airplanes and ships with possible trading amongst accredited parties. This newfound liquidity will propel growth for industries who have traditionally had a heavier reliance on credit lines. In the future, with the capability to collateralize digital assets as loans in a peer to peer manner, the hardest puzzle to solve will be legal. In that aspect, the flow of legal talent will be welcome to tackle legal challenges, whether in the recognition of digital assets as possession, innovation in the KYC/AML machine learning solutions, or the formalization of smart contract language as a legal language.

Each generation is championed by its own idealistic community, which while admittedly rambunctious at times, shares an exuberance stemming from a sense of wanting to change the world. Instead of an easy dismissal of such efforts, the ideal scenario would be for the generation before to guide and chaperone the younger wave, allowing their experiences to be shared and passed down effectively. The younger generation will also need to be patient in knowing that the adoption of any new technology is not instantaneous, and to acknowledge that disruption takes time. It is only via a common ground bridged by mutual understanding can the symbiotic relationship between both generations work.

Aditya Das, Market Analyst at Brave New Coin, a leading provider of high-value cryptocurrency market data said:

For many in the industry, mainstream doubts around blockchain’s potential and its associated “Trough of Disillusionment” represent an opportunity. Projects that are able to build effective solutions during this time will likely be the biggest winners once the technology hits the next phase of its hype cycle, the ‘slope of enlightenment.’

Whether the 5-year development lifecycle forecast by many projects was realistic is debatable. Blockchain is a new technology and it is difficult to predict exactly how development roadmaps will play out in the wild. Nonetheless, our own research shows that hundreds of millions is still being invested every month in the sector - building the rails for blockchain technology was always going to be an expensive and time consuming process - and an evolving one.

Bitcoin for example, was primarily thought of as ‘magic internet money’ for the first few years of its existence. It has since evolved into a digital store of value for investment purposes. This has meant new challenges around market manipulation, custody solutions for institutional buyers, and the effective tracking of money flows.

Institutional acceptance of blockchain as an effective technology will be needed for the space to mature. Most of blockchain’s value today is speculative and the chickens will have to come home to roost at some point. More effective utility outside of digital transferability and speculative investment potential needs to be realized.

Builders in the space have already created tangible solutions around permissionless, automatic credit, lending and direct fundraising. More diverse use cases around sought after solutions such as remittances, supply chains and decentralized software applications need to be realized before the slope of enlightenment can be hit. However, once the technology matures the value capture potential remains enormous.

Xinshu Dong, Co-founder of RockX, a new digital assets services platform said: 

Blockchain is, as anyone working within the industry or familiar with the digital assets market will tell you, a nascent industry. This nascency comes with the constantly changing mixture of speculation, evangelicism, and skepticism which all young technologies experience at their outset. This is true of everything from the inception of the internet to the creation of wireless bank transfer. Perhaps Gartner's assessment that we are currently sliding into a ‘Trough of Disillusionment’ during the blockchain ‘Hype Cycle’ is correct—but this does not mean we will not come out the other side, even stronger and more confident. As the 'hype' around the technology dies down, we will see more and more ‘bad actors’ and faulty business models exit the blockchain ecosystem. Eventually, those left in the industry will be those who truly believe in what this technology has to offer and those who are working towards the mass adoption of blockchain technology and digital assets.

I am in full agreement with the Gartner report that blockchain, in the future, should be completely invisible to the end-user. In order for blockchain to integrate into mainstream markets successfully, users shouldn't have to worry about selecting the right platform, smart contract language, or consensus algorithms — that's our job. All that they will care about is their access to decentralised applications and that user experience, accessibility, security, and performance are comparable—or superior—to current systems.

As the Gartner report clearly states, many of the developments taking place today within the blockchain sector will allow for greater scalability, interoperability, and cross-chain functionality by at least 2023. I would encourage that the industry work in unison to reach this challenging yet achievable, yet target. Blockchain technology is, as of yet, an emerging technology—but through continued innovation, hard work, and innovative thinking, it will have profound effects across a number of prominent industries. Innovators and entrepreneurs would be wise to forget the hype cycle, to remember why they entered this industry in the first place, and to continue to work towards innovative, practical blockchain solutions.

Tom Maxon, Head of U.S. Operations at CoolBitX, a blockchain security company, said: 

In order to truly evaluate the performance or “‘successes’ of blockchain technology to date, I think it is first necessary to take a step back and define what blockchain technology is actually trying to accomplish. Blockchain is not merely about disrupting legacy systems. It has far larger goals—to transform the financial system, legal contracts, possibly the nature of institutions themselves and the very fabric of the social system. Therefore, we shouldn’t judge blockchain against the typical Silicon Valley mantra, “Move Fast and Break Things.” It takes time to transform society.

Experienced tech entrepreneurs are used to things like scalability, network effects, critical user mass coming to fruition within a five-year window. This places incredibly unrealistic expectations on the growth trajectory of a technology that has very different objectives to the technology coming out of Silicon Valley in the 90s and 00s.

A more accurate  gauge of blockchain’s progress is to compare it to the TCP/IP, aka the technology underlying the Internet, in the 70s. Back then, TCP/IP had a single use case—network communication—and was developed by a core group of volunteers. Blockchain’s primary use case since 2008 was bilateral financial transactions. Similar to TCP/IP, t was also developed by a core group of volunteers.

These two innovations address two very fundamental human needs:  the need to communicate and the need to transact with one another. As we saw with the internet, innovating on efficient communication networks unlocked a tremendous amount of downstream value by creating media platforms and digital marketplaces. Can you imagine how much valuable future innovation can be provided by bilateral financial transactions? Not to mention blockchain’s second use case as a store of value.

The internet is a case in point that, sometimes, the most transformative technologies can be slow in their maturation, only to give way to extremely robust and longstanding products and benefits. This reality is not offset by the generation of speculative bubbles around the technology. In fact, these bubbles may be the result of forward thinking individuals grasping the true potential of nascent tech, only to be followed suit by retail investors who fail to conduct legitimate due diligence on speculative ventures. Twenty-five years after adoption of TCP/IP, the internet produced pets(dot)com and the speculative hype bubble of 1998. Nine years after the bitcoin whitepaper, blockchain produced Cypto Kitties and the speculative hype bubble of 2017. Taking these timelines into account, I’d say blockchain adoption is definitely outperforming the internet - so in a way, the Gartner report is generous!

When we realize that blockchain is still in the infrastructure-building stage, we can put our efforts into perspective. More stoic focus should be put into building proper standards, useful technology, and usability that will allow the next generation of brilliant innovators to take what we’ve built into new frontiers.

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