Blockchain: Revolutionary Technology Or Over-Hyped Bandwagon?
Is blockchain technology the second coming of the Internet? That seems to be the enthusiastic message from many new startups that I meet with and also from top business consultants such as Don Tapscott, who authored with his son Alex Tapscott, the recently published book, "Blockchain Revolution: How the technology behind Bitcoin is changing money, business, and the world."
Blockchain is a globally distributed ledger -- a platform for reliably clearing transactions without the need of a bank or other third-party. I get the concept behind blockchain, that everyone owns the same ledger and thus it can't be easily altered unless you can gain control of the majority of all the computing resources.
But I don't yet get how this eliminates "middlemen" service fees after all, the startups in this sector are the new middlemen and have plans to make money on their services.
- how it can be scaled up to millions of transactions given the huge computational costs and the time taken to process a single transaction
- how can blockchain escape regulation by governments
- how can small blockchains provide the same levels of trust as the huge Bitcoin blockchain (which is larger than all of Google's server farms combined);
- and why will blockchain challenge giant corporations, as many have said, when giant corporations are the ones sponsoring the blockchain events and conferences, and seem to have the most to gain?
- where are the pain points? Surely, we have solved the problem of clearing transactions? Visa and Mastercard do it all day long and they manage to verify identity and guarantee security for a fairly low fee considering the 30% and more that Internet companies such as Apple and Google charge for handling payments for digital goods .
To find some answers, I turned to a recent event at the NASDAQ Innovation Center in downtown San Francisco that featured father and son Don and Alex Tapscott, followed by a panel discussion with John Wolpert, Global Blockchain Products Director at IBM; Haskell Garfinkel, Partner and FinTech co-lead at PricewaterhouseCoopers; and Ryan Smith, co-founder and CTO of Chain, a startup building blockchain infrastructure for financial institutions.
Above video, Alex Tapscott with his explanation of blockchain.
Below: The panel discussion.
Foremski’s Take:I didn't get my questions answered but I did see a slide that appeared for a few brief moments at the end of Don Tapscott's presentation, about all the things that could stop blockchain. Some of my questions were represented as showstoppers on that slide.
Blockchain is certainly fascinating to watch, who will use it and the many new use cases being proposed.
The question is can blockchain overcome the many technical and societal challenges it faces, and emerge as a revolutionary technology that’s nearly as important to the global economy as the Internet itself? Too early to call but not too early for the blockchain cheerleaders.