Lots of companies are buzzing about blockchain. But there are still many of you that are taking a wait-and-see attitude about the technology. And frankly, as I see it, you must be a student of history. Let me add, you are not alone and you have good reason to be somewhat cautious about its future.
If we have learned anything from our past, it’s to pay close attention to history. History teaches us many things. In most cases, it gives us a window into our future. History has a tendency to repeat itself and that means sometimes we forget the lessons we have learned from our past.
Let’s look at the blockchain. First and foremost, we need to understand that blockchain networks simply rely on a decentralized infrastructure that are not controlled by any one individual or group and that is why they were supposedly created in the first place.
If we think long and hard, most technology, products, or events have been created because someone imagined they could do something better, faster, quicker, or cheaper. Sometimes it was for the good of one or for the good of many. Let’s ask ourselves why was the blockchain created? Who created the blockchain? Who controls the blockchain? Who governs the blockchain? When it crumbles who protects our citizens or our governments? Is this a global world transacting together or among one foreign currency?
As you can suspect, most tech companies such as SAP and Oracle, as you can read in my blogs “Is SAP Leonardo Still IoT?” and Oracle Adds Another Tech Firm, as well as IBM, Microsoft, and Mastercard, just to name a few, have made a big push into the blockchain. Even many analysts, industry observers, and university professors including those from Harvard Business School are pushing the technology as something that can’t be ignored in 2018.
Let’s take, for a moment, the stock market, which is able to handle billions of transactions between traders and other parties every day. Part of the problem with blockchain is that it can only handle a small number of transactions at a time mainly because of the significant computational power (simply electricity) it takes to transact, verify, and confirm each block of transactions or the contracts necessary.
In time, perhaps computational power will be more mainstream and transactions will be more readily available. However at present, each block of transactions requires a delay in the range of an estimated 10 minutes to confirm. Thus, blockchain has yet to prove that it can handle the scale of transactions that are required on a day-to-day basis let alone minute-by-minute. While the potential of blockchain to truly usher in this new era of advanced or even smart contracts where everyone can agree digitally in a secure realtime basis of verifying funds and transactions is potentially doable, there is still much work that needs to be ironed out.
There are still many issues of governance (no clear structure), legality (who controls it, no central authority), speed of transaction (computational power), and transparency (untrusted parties). Today there are still far too many bottlenecks despite the millions of transactions that have transpired in blockchain and other layers of bitcoins. There is no question the cloud will play a pivotal role in the ascendancy to greater blockchain adoption in more markets.
Such items as Etherium, R3, and other protocols will need to be explored to enhance the speed of transaction times to ensure its success. Much of its adoption stems from the same hurdles currently surrounding interoperability with the IoT (Internet of Things). Similar to the IoT, there are many fighting to have their protocol to be named the standard, but none have made it to the pinnacle just yet. We are already seeing challenges with bitcoin as it grows and the developers can’t seem to agree and the governance in and of itself becomes problematic, and so it begins.
Looking beyond the immediate hurdles, blockchain might be a disruptive technology. But like any emerging solution, it has yet to bear any real significant fruit for those looking beyond the distributed ledger level. Time will tell. It does deserve taking a look at.
But the real question here is do you want to be the first person to dive right in? Or is your company just better off watching, learning, and letting everyone else travel down and discover the rough terrain as you wait patiently learning and observing from the sidelines?
Sometime observation is the best teacher and then you can develop a real plan and then decide how to proceed one way or the other.
Another, perhaps even more interesting, set of questions that come to mind that we might want to consider is blockchain eventually forces us to say goodbye to lawyers. Will we say goodbye to bankers? We are now talking about machines making all the decisions. Based on all the enthusiasm that is being espoused we will need a lot of distributed power to mine all of this. To properly allow these types of transactions we need a lot of power. Candidly, I have to confess at this point we haven’t realistically mastered running our smartphones and all these connected devices without disruption. We will need a lot more data than we ever dreamed of to make this happen. And I mean, a lot more “cloud,” so to speak, than we will ever have at least in my lifetime.
So it is fair to say, when it comes to politics, economics, or just plain greed, there are no guarantees in anything when it comes to business. But if history has taught me one thing for sure this quote is quite fitting, “Those who cannot remember the past are condemned to repeat it.” Then again, for most of us in the U.S., that just means paying taxes and death.
Perhaps even more importantly, what we do depends entirely on what we learned from history. If history teaches us anything, it is simply this: every revolution carries within it the seeds of its own destruction. And empires that rise will one day fall. However, I encourage and welcome any rebuttals if you can ensure that you can 100% trust and guarantee that no one will ever control the blockchain.
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