Short answer: Both.
To understand where we stand right now, think of it as your first time at the gym. Do you remember your first day at the gym? The cycle goes something like this:
Trigger: I’m fat.
Inflated Expectations: Losing weight and getting in shape before the weekend.
Trough of Disillusionment: It’s hard to train daily and to give up carbs and sugar.
Slope of Enlightenment: I tried different type of diets and training techniques.
Plateau of Productivity: I trained effectively and I got the best results.
The Good News
Blockchain just started, and 2018 is just the beginning!
The Bad News:
It’s an experiment and a bubble.
And bubbles are the first driver of innovation.
Remember your dream of getting fit before the weekend? That’s a bubble, too. And only due to your Inflated Expectations, were you able to reach the Plateau of Productivity.
Blockchain right now is in the Inflated Expectations stage, and this could continue for several more years before the “bubble will burst” or in other words, the hype dies down and people stop talking about it as much.
We’re witnessing something radical yet immature, but there is predicted to be significant value in the Blockchain business; market value is projected to reach $3.1T by 2030. Blockchain is not only evident in finance, supply chain and government, the interest is across the board, and worldwide.
We’ll see the value of Blockchain in:
- Companies, industries, banks, and the manufacturing sector. It is expected that the largest impact would be across these fields.
- Smart contracts, business rules run across mutable parties.
- Companies’ own benefits, using common data between different divisions, or across multiple geographical regions.
- Using the immutable data that cannot be corrupted or changed. This can be seen as highly beneficial in healthcare, the property market, etc.
- And last but not least, cryptocurrency, the most well-known of which is Bitcoin.
Currently, there are seven countries looking to create their own cryptocurrency backed by fiat currency.
So the type of Blockchain projects that would be valuable are:
— Projects across companies
— Projects within companies
— Record keeping projects
— Projects based on cryptocurrency tokens
Blockchain hasn’t caused any disruption yet, we’re just in the initial phase, which is termed as the “irrational exuberance” phase.
People are interested in it, they want to play with it, and they’re trying to see how they can apply it.
Blockchain’s decentralization is a solution within a problem; it takes a while for centralized companies to get their heads around it and to see how they can extract value.
Many of the projects will fail, and that’s ok, but from the experimentation will come interesting models, and the initial success will lead us to a more mature use for the large establishment that’ll make a radical change. And that will take time.
If the transformation is not applied successfully in one company, it will never succeed across multiple companies.
Enterprises are unclear how to extract business value from Blockchain:
26% — Lack of good business case ideas
22% — Compliance, security, regulatory factors
15% — Unproven unavailable TCO, digital value calculation for Blockchain use
11% — Skepticism over blockchain value
7% — Lack of skilled Blockchain developers to execute proof of concept.
7% — Lack of funding
7% — Preference to maintain an exciting and operational business model
So it would be wise to say that most of the current work is throwaway, but experimentation is always necessary in technology.
The value of these experimentations is geared towards the overriding question of how we could make good use of Blockchain technology. Where would we apply it? What types of new business models could this lead into? And what amount of business process, or even culture change might we have to realise?
Results of some Blockchain-like bubbles throughout history:
Railway Mania 1840s — Collapsed 1846
A vast expansion of the British railway system, a total of 6,220 miles (10,010 km) of railway line were built as a result of projects authorised between 1844 and 1846 — by comparison, the total route mileage of the modern UK railway network is around 11,000 miles (18,000 km).
Dot-com bubble 1990s — Collapsed during 2000s
Companies such as Cisco, eBay, and Amazon.com, that later on became industry-dominating mega-firms. And there are now many information technology companies ranked at the top of the Fortune 500 list of the largest companies by revenues.
What the Blockchain bubble is not:
The Dutch Tulip Mania (aka “Tulipomania”) of 1634–1637
The South Sea Bubble (1716–1720)
The Mississippi Bubble (1716–1720)
Japan’s Bubble Economy of the 1980s
All Other Stock Market Crashes…
When the scientist Isaac Newton lost a fortune in The South Sea Bubble, he famously remarked:
“I can calculate the movement of the stars, but not the madness of men.”
So if the most influential scientists of all time and a key figure in the scientific revolution was bubblized; why shouldn’t you? and you may as well enjoy it.
Until then, Bitcoin, and The Herd