The blockchain industry “will not survive” if it fails to show workable solutions, solve its reputation crisis, and get funding to innovators pushing new use cases, according to Lisa Short, co-founder of Mind Shifting, who was speaking on a panel at London Blockchain Week.

“We have to start having some real honest conversations about the future of blockchain, and we’re not having those yet,” she said. “Blockchain is a frontier technology. We don’t see firms nowadays calling themselves ‘internet companies’ so why should we see them calling themselves ‘blockchain businesses’? They’re not the labels, they’re the underlying drivers and processes. Part of the problem is that a lot of the innovators out there have no access to venture capital and the world they’re trying to sell to they either don’t understand or doesn’t understand them.

“The greatest challenge that firms have is getting access to the market because they’re speaking a different language to the world that wants to buy their product. They’re speaking to them as if they’re technology companies when they’re not, they’re problem solvers. A lot of these firms aren’t about revenue generation, they’re for reducing cost inefficiencies.”

Blockchain research group Dier reported in 2018 that blockchain and cryptocurrency-based startups raised $3.9bn through venture capital investments in the first three quarters of 2018, up 280% when compared to 2017.

Alex Fazel, head of communications for Swiss initial coin offering (ICO) platform Swissborg, added that the industry “tends to be overly optimistic in markets where there’s a risk, but pessimistic when there’s potential. At the moment as an industry we’re digging a deep hole, but they say the deeper you dig the infrastructure the taller you can build a high-rise, so I have a lot of faith.”

Blockchain is undergoing a brand crisis, according to Fazel. “People say ‘blockchain cuts out the middle man, it’s disintermediation, it’s decentralised,’ it’s always the same message. People need to realise that it’s not about what the technology inside the solution can do, but about how we can use the whole platform.”

“Blockchain doesn’t work on its own. It works with AI, it works with virtual reality, and every new technology,” added Short. “We need to move away from just being 'fintech' and just being 'blockchain'. The market sees those words and associates them with crypto, ICO scams and the crypto demise of last year. There’s a lot of pessimism around.”

A study from Satis Group, conducted alongside Bloomberg, found that more than 80% of ICOs in 2017 were identified as scams. 4% of ICOs were found to have failed completely, and 3% had experienced “ICO death”, where the project falls from its listing on any exchanges. According to the study, total funding of coins and tokens in 2017 hit $11.9bn, with $1.34bn of funding going to ICOs identified as scams.

Veronica Mihai, founding partner and head of investor relations at Bloomwater Capital, said that a key factor overlooked, especially when looking at the trading or investing of crypto assets, is data. “You should not make decisions based on six months of data, or even 12 months of data. There is a lot of infrastructure that needs to be in place, and the hedge funds can guide that, but most have taken this ‘we’ll figure it out along the way’ strategy and that’s not the right approach. If I want to be a sustainable business, I have to ensure that I have everything in place. Then when you trade with exchanges, you must ensure they know where they are storing the token, or you can end up with a paradigm where an exchange is its own market maker.

“In 2017 there was a lot of hype created around ICOs, and then we had events like hacks and the loss of investments that followed, as well as some of those projects being scams. No one really stopped and thought about what would happen when these cryptocurrencies were funded, and they needed to build a company from it all. You can’t just blame everything on the bear market.”