TL;DR: It took long enough, but it appears aspects of legacy finance are beginning to realize they’ve been had. Blockchain is falling quickly out of fashion, and more reports are making their way about investment drying up as cold, hard reality sets-in: a decades-old technology, effectively a database, is not a cure-all nor revolutionary, and borders on a gimmick.
Blockchain Magical Thinking Subsides
It was a good run, right? Blockchain technology was to simultaneously bank the unbanked, track hapless political refugees and wayward migrants, improve supply logistics, sort charitable giving, and democratize everything from voting to property records. And then it didn’t. Like, not at all.
The interim saw entire business school divisions pop up, cryptography courses offered to get ahead of the inevitable coming wave, book deals inked, Ted Talks. We. Had. It. All. Blockchain, no article, such as The, needed — like Cher or Nike or Trump. One word. Blockchain. Slap the word Technology on the end, and voilà, a new phrase allowing for infinite interpretations. Venture capitalists swooned. Hundreds of millions aimed at blockchain technology in response.
That appears to be dampening, as Wired recently detailed. They follow the plight of tech startup founder Amos Meiri and his returning of investors’ money after trying to reconcile blockchain with its hype. “Meiri’s company, Colu, develops digital currencies for cities—coupons, essentially, that encourage people to spend their money locally,” the online technology journal explained. “The company was having some success with pilot projects in the UK and Israel, but Meiri had an idea for something bigger. He envisioned a global network of city currencies, linked together using blockchain technology. So he turned to a then-popular way to fund his idea: the initial coin offering, or ICO. Colu raised nearly $20 million selling a digital token it called CLN.”
A year later, and he’s having second thoughts, believing his epiphany is just the beginning for the industry at large. Computer scientist Emin Gün Sirer stressed, “What you’re seeing right now is lethargy. The current technologies fall really short.” For electronic digital cash enthusiasts, blockchain is, again, a clunky piece of database code complicated by a decentralized twist. Its lone relevance, its killer application, is bitcoin as a kind of currency. Beyond speculative price rises, however, those attracted to blockchain soon became bored, craving a new narrative.
That meant repackaging the bitcoin currency as a silly plaything for 400-pound mother’s basement-dwelling cypherpunks, placing a renewed emphasis on the technology undergirding it all, a distributed ledger. Nevermind cryptocurrency! Too dark, too anarchic. This blockchain, thing, however, now that is something! Permissioned, enterprise blockchains became all the rage for corporate shills.
But what that translates into is really introducing a solution where there was no problem. A permissioned blockchain takes all the sex out of why blockchain caught-on in the first place. Trust, not having to rely upon it, is what makes Bitcoin’s ledger so compelling. Data storage systems, such as Amazon’s AWS, already work well for enterprise needs, storage and otherwise, without resorting to reinventing a very expensive and poorly performing wheel.
Still, companies such as IBM have doubled-down on their supposed blockchain focus, with hundreds of employees dedicated to whatever it is they’re trying to do. That too will likely come up snake eyes, producing nothing. The difficult truth is peer-to-peer digital cash remains an incredibly revolutionary idea, one regulators fear, legacy finance wants to cripple, and those dependent upon either or both are trying very hard to end. It’s anyone’s guess if the world needs an enterprise database, but that has nothing to do with bitcoin. Much clearer is how a better money benefits those who are locked out of traditional monetary systems, marginalized by political classes, who crave financial sovereignty and a break from minders.
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