Recently I have attended three conferences on widely divergent topics. Every one of them featured blockchain and what everyone was going to do about it and with it. It seems that the contemporary standard for demonstrating your innovativeness is showing you are into blockchain.
Blockchain is, according to the banks, going to transform the financial services industry. Even little Azerbaijan is introducing blockchain to regulate relations between banks and customers. There are countless blockchain startups and new ones start every minute seemingly.
I’m guilty of the hype too. At the beginning of the blockchain brain-freeze I spouted off (“Blockchain – A Revolutionary New Way to Stop Corruption in its Tracks, Everywhere!”) but at least I was ahead of the crowd (November 2015). More recently I opined that it wasn’t primarily a financial technology (December 2017). I was right on that one too, but everyone has already jumped in, so hardly original.
Why the fascination? Well of course it’s a neat idea. But so what? Railroads were a neat idea once too, and then everyone lost their shirt. Just because an idea is neat doesn’t mean it escapes the human tendency to irrational exuberance. In fact that’s exactly what we’re seeing now.
Let’s look at this clinically. Blockchain is just a form of accounting right? No more no less. The distributed ledger takes double-entry book-keeping one giant step forward. That is true. But let’s call a spade a spade. It’s still only accounting. My apologies to all those fine accountants everywhere but since when are they ever seen as being creative and innovative (even though some of them undoubtedly are)?
Chances are we’re going to get some real humdingers of blockchain apps, but in their implementation they will quickly be dumbed down to the level the profession maintains. That means safe, sold, unexciting. Which is probably good so we humans don’t get even crazier than we already are.
You might see this as a jaundiced perspective. Perhaps rightly so. But blockchain reminds me of when spreadsheets where first invented (remember VisiCalc?). Kind of similar right? It was truly revolutionary when it came out. Spreadsheets now are useful, even critical, but still a boring technology, beloved by boring financial types with no creativity (sorry guys, your PR sucks).
Lotus was a true blockbuster but soon its star faded. That’s what I see for blockchain. Great for people to do real jobs in neat and new ways who don’t have an ounce of innovation in their bones.
And here’s a thought. Is blockchain really as effective as it’s cracked up to be? I mean, how come all these bitcoin exchanges are being ripped off when they all use blockchain to secure this diaphanous currency?
Aren’t money and assets supposed to be ultra-secure when you wrap it up in a blockchain cocoon? Are we missing something? Is blockchain already fatally compromised? If so, will the proliferation of blockchain apps and uses just lead to more hacks and losses rather than less? Will blockchain lull us all into such a sense of false security that the use of blockchain will actually lead to less security and auditability than we have now? Low as it already is?
Actually the chances are that they true beneficiaries of blockchain will be the most boring financial professionals of all, the auditors. That isn’t a bad thing. They really need help tracking down lost bitcoins. If nothing else it will make them look fashionable until the bloom is off the rose.
You get the general drift. We might be implementing the biggest security threats known to humankind by going the blockchain route. Things could well get worse rather than better. Maybe we should just invent a better version of double-entry book-keeping? Just keep things reliably boring?
Here’s the threat. The coming shakeout in the blockchain market. It’s bound to happen, just as it is with the recent stock market swoon. What goes up must come down.
In this case that means thousands of blockchain startups and tens of thousands of big company blockchain projects, some of which are going to go spectacularly wrong. If you have skin in this game most of you are going to lose all of it.
Just remember to buy a new shirt sometime soon.