In my wallet I have a section of small brightly coloured sheets of plastic, with which I can approach almost any vendor in this country, and in exchange for one of those sheets of plastic I can procure goods or services. No one will ask for my name, photo ID or date of birth, the deal is instant and the apparent transaction cost to me is zero. As systems of trust go, it’s a hard one to beat, for now.
Bitcoins, and their underlying blockchain technology, have been around since 2008, but peculiarly for a new technology, it has taken nearly eight years to reach Gartner’s perfectly described ‘Peak of Inflated Expectations’.
My personal two cents (or 0.000033 bitcoins) on why this is so, is that there has been a slow grasp of what this technology can potentially provide society and businesses in real-world terms. Yes, the data scientists and cryptologists are having their fun with the technology, but to draw on a slightly dated expression, where’s the killer app? Maybe the lexicon of bitcoin is also off putting for the lay person trying to get their head around the technology: cryptocurrency, blockchain and distributed ledgers do not readily echo existing user-tech vocabulary. From my personal experience, apart from not having enough of it, I have never considered myself having any systemic issues with money, monetary transactions or the ability to spend money – so why the hype?
This is where trust enters the story, what this technology does is provide you and I (and anyone else doing business together) with complete trust that the money or agreements they have with another party is legitimate. In a real-world sense, it is the digital equivalent of knowing that your bank notes, deeds of ownership or signatures on a contract are 100% genuine. And most importantly, there is no longer a need for a third party (e.g. a bank) to vouch for this trust (whilst obviously taking a fee off the top for their services).
U.S. entrepreneur Marc Andreessen explains it: “Bitcoin (blockchain) gives us, for the first time, a way for one internet user to transfer a unique piece of digital property to another internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate,” he said in a New York Times article.
The Real World
So if you can identify a real-world situation that involves either trust, money or intermediaries (preferably all three) then you have yourself a good ole’ fashioned disruption opportunity. On top of this ‘mere’ disruption, there is an explosion of other possible applications ranging from voting systems, identity management, micropayments, and intriguingly this couple were married on the blockchain last year. Yes, the ‘peak of inflated expectations’ has definitely arrived.
On the flip side of all this hype, recent history tells another story. Cashless transactions (credit cards) have been around for over 50 years, PayPal 20 years and digital wallets over five, yet most of us still carry physical currency with us. So it is far from certain as to how trust-technologies will actually impact the way we do things in both the near and far reaching future. With that said, the smart money (bitcoins) is backing one of the first ‘ubers off the rank’ to be blockchain technology that enables new and cheaper ways of transacting both retail and institutional payments.
Gartner’s curve predicts something of a trough in anticipation for blockchain followed by technological enlightenment, so this is certainly a technology for our future. In the meantime, I can leave you with this piece of salient advice.
When someone next asks you why you’re working on a blockchain technology project, simply tell them this, ‘trust me!’