Products

We have some classic business school case studies in failure if we think back to some high profile 90s tech busts: pets.com (pet supplies), Webvan (groceries), and Boo.com (fashion). Twenty years later, however, people are regularly using the internet to buy pet and human food (Tesco Direct, Ocado, Amazon, HelloFresh, etc.) and clothing (Asos, Net-a-Porter, et al). There are a number of reasons for the above failures — overvalued markets, lack of market validation, poor management, etc. Timing is very important, and sometimes ideas that we may scoff at in hindsight might have just been too early. In the same way, many blockchain startups may indeed fail or be ahead of their time. But in the long run, we feel that these ideas will catch on, and implementation will be done effectively.

There are already a number of interesting products being built with blockchain technology that do not use a token or cryptocurrency to function. Wyre, which has created an API for payments and KYC (Know Your Customer) verification, is making reputation the killer app of the blockchain world. Hyperledger’s Fabric is being used to build blockchain solutions and allow them to be tested across any industry vertical. Chain is building blockchain infrastructure that other financial services companies can build on top of. Their cryptographic ledgers aim to allow breakthrough financial products and services to be built without spending the time to develop the underlying infrastructure.

These are but a few examples of the many companies contributing to the ecosystem, particularly in terms of enterprise solutions — financial services, private blockchain solutions, smart contract implementations, etc.

Besides the massive amounts of cash being poured in ICOs in the last two years, it’s interesting to look at where VC money is being directed. According to research from Diar, VC funding for blockchain and crypto-related firms almost tripled in 2018 to almost $4 billion. Of the ten largest deals, only DFINITY has a utility token; the rest are traditional equity investments.

Regulation

Finally, the increase in regulatory activity (particularly around security tokens/STOs) can also be viewed as a positive for the blockchain movement. Regulations protect consumers and investors, sustain orderly markets, and maintain the integrity of large systems. Our internal research indicates that all but 9 countries in Europe are either actively watching or have begun regulating the blockchain space. 22 EU member states have signed a declaration on the establishment of a European Blockchain Forum.

Source: Blockdata research on regulation within Europe.

At the recent Singapore Fintech Festival, IMF Managing Director Christine Lagarde discussed the necessity to take a serious and careful look at the case for digital currencies. This may end up not aligning with the utopian vision of Satoshi Nakamoto and his acolytes, (akin to believers in the US Constitution’s original intent and meaning, let’s call them Bitcoin Originalists). However, for blockchain to be fully realized, it needs a wide coalition of developers, financiers, and regulators to work towards common goals.

Where do we go from here?

One can view these turbulent times as part of a broader history of economic cycles. The frenzy and mania of the last two years has allowed an enormous amount of capital to flow into (and out of) the development of blockchain technology. This has gone not just into building technical infrastructure, but also to developing human capital. There are now thousands of talented software developers that are building blockchain applications. Just a decade ago, it was a handful of cypherpunks working on this.

In her book Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages, Carlota Perez says that an installation period: