The conversation about blockchain is presently dominated by cryptocurrencies, with a certain amount of attention spilling into Initial Coin Offerings (ICOs). There is no shortage of scepticism about the technology in these circumstances; cryptocurrencies look more like investment opportunities – and very risky ones at that – than actual currencies, and it’s no exaggeration to say that the majority of ICOs are scams. A recent study found that almost 80 percent are scams and just eight percent reach the trading stage.
However, in my conversation with Tate Cantrell, Verne Global's CTO, I was struck by his conviction that cryptocurrencies and blockchain technologies are here to stay. Tate says: "Just as a lot of people thought social media was a flash in the pan - and were wrong - they are wrong about social currency. It isn’t going to go away."
This is an interesting analogy for three reasons. First, it points to cryptocurrencies as a way of amplifying things that people already did – trading is to social currency as conversing is to social media. Both enable things we couldn’t do before – in social media, that includes having a vast network that we couldn’t manage face-to-face, getting instant news from anywhere in the world and even conversing with celebrities, experts and politicians. Social currency, in Tate’s analogy, will have similar expansive properties.
Second, it suggests that what we see now is not cryptocurrency’s final form. You could trace the origins of social media back to bulletin boards and internet relay chat in the 1980s, if you wanted. You could certainly say that modern social networks, such as Facebook and Twitter, have their origins in 1990s platforms such as AOL Instant Messenger and the networks of the early 2000s, such as Friendster and MySpace. Though digital currencies date back to the 1990s, cryptocurrencies are less than a decade old. Are they still in their MySpace era?
Finally, Tate points out that the blockchain itself will have applications way beyond cryptocurrency and the current wave of ICOs. This, too, has a social media analogy: Twitter’s founders had no real idea what it would be used for – its uses emerged from user behaviour. Similarly, when Facebook first opened it was limited to university students – few predicted that it would be used for gaming, ecommerce, news consumption and all manner of other tasks. Facebook is already looking at ways to expand social networking beyond the computer screen, with a move into virtual reality. In early May it announced that it had created a blockchain team within the company.
It’s likely that the blockchain will significantly change how we live our lives. The companies that dominate the blockchain era will be the ones that draw on the benefits of the technology itself – that it makes it possible for a massively diverse society to interact, transact, remember and evolve.
For example, it might be used to store identity information for refugees. If they lose their passport in transit, they can still prove their identity through the blockchain. Or it could record the decision-making process of an AI that analyses medical scans for signs of cancer. If a problem arises, such as a patient being misdiagnosed, the hospital would have the blockchain data as an unimpeachable record that could determine who, if anyone, was at fault.
Many of these uses are emerging already. IBM is working on a blockchain that will handle the supply chain for jewellery so customers can be sure that their purchase is ethical and sustainable. Car manufacturers have come together on a blockchain for ‘mobility as a service’ . Meanwhile, BBVA, the Spanish bank, has become the first in the world to provide a loan using the blockchain .
Just as few remember failed social networks such as Google Buzz, Orkut or Yo, there are plenty of blockchain and cryptocurrency services around today that will not last. There are also many that seem stupid. But remember: neither of those are good reasons to dismiss the technology itself.
If we are in the MySpace era of ‘social currency’ then the companies that are going to use that technology to transform our lives are far from household names today. They might be still be in their startup stage ; they might not even exist yet. When they do rise to prominence they will transform the world in ways that we – and even they – cannot yet imagine.