Block.com is the new Dot.com.
If Cloud burst on to the scene in 2014, then 2015 was the year Blockchain went big. With the wholesale scramble to find the next big thing, we ask is Block.com the new Dot.com?
Blockchain is having a moment. Banks are joining with start-ups, funding research, even forming a global consortium to explore possibilities. The media are lapping it up with coverage from the New York Times to the Sydney Morning Herald, from Estadao in Brazil to the BBC. As for the general public, they are assured it is significant but are not quite sure what it is.
Like any new technology, blockchain can be a little hard to comprehend; after all this is a world where an input means an output. It may also be hampered by close associations with murky, new-fangled currencies.
Let’s break it down.
A blockchain is a database. Like all databases before, it simply houses data. Fun things, like the date and amount of the first salary payment of 2016 hitting your bank account.
So far, so standard.
What IS unique is that ownership and responsibility for sustaining the blockchain is shared. It is distributed among its scattered members – known in the parlance as ‘miners’. Each miner plays a part in processing, verifying and maintaining the blocks of data. If information is out of place, such as an incorrect zero in your pay cheque, other miners will spot it.
It is this decentralized feature that makes the technology unique; providing (as yet untested) transparency; increased security and data integrity.
What does this all mean to the Man on the Street?
Where things get exciting are the many applications of this database. The best known thus far is the Bitcoin cryptocurrency but that is just one string to its bow. The robust security and clear transaction history opens up a diverse range of possibilities.
Its uses have been lauded for ensuring contract compliance; securing patient records in a medical practice; as a notary public; or to verify voting results. Tunisia is now issuing its digital e-Dinar via blockchain technology, addressing local financial inclusion (Bitcoinist.net). Albeit unsexy, each of these applications aim to comfort consumers regarding information security and denote rigorous oversight.
So, how is Block.com the new Dot.com?
Cast your mind back. The end of the 1990s were wild and heady times. The US was in the midst of its longest economic expansion on record, the Asian Financial crisis had yet to fully emerge and Europe was all abuzz with talk of its impending new currency, the Euro.
Most significantly, the Internet had arrived.
Like blockchain, this too was a concept beyond the contemporary understanding. The Internet came with its own language – ‘browsing chatrooms with Google’ – and introduced the torturous white noise of dial-up. It promised to transform our working lives: to shrink hours while increasing productivity. It was going to alter our very existence and as now, the media were all over it.
The wider public tussled with this new technology but bought the vision. New business models began to emerge in this online world. In a low interest rate environment, against the backdrop of exuberance, money flowed in. The dotcom boom was born. Cue crazy IPOs and stock market valuations in the millions, for companies that had yet to turn a profit. Then came the bust, with US$1 trillion wiped off the stock market in just under a month (TIME).
Parallels to today.
Today, the Internet is second nature and our smart phone has become the new marketplace. Stock-market investors are still raw from the 2008 economic meltdown and global recession.
We may pride ourselves on lessons learned and greater investor sophistication. Nonetheless humans are still prone to hype and bluster. The end of 2015 saw speculation in industry media on the identity of the first blockchain Unicorn. Controversial boxer Mike Tyson recently announced the launch of his own bitcoin app.
One must ask, is this technology sparking a frenzy? Do people really understand it, understand the business models they are investing in?
To sound a note of caution, with a technology so virgin, are there enough blockchain experts out there to ensure you’re not sold a dud? Even the Ethereum gurus admit that they are still in the visualizing and testing stage for many of their products.
There are a few crucial points distinguishing excitement around blockchain versus the fever of dotcom.
- Blockchain may, in fact, be the ‘next big thing’. Yet it is coming on-stream at a time where there are many ‘next big things’ in Financial Technology. The impact is diluted as we now juggle e-wallets and crowdsource lending.
- The investor profile. In this case it’s private equity rather than public money fuelling the boom. Billion dollar valuations of FinTech Unicorns are shrinking by the time they reach public listings. Stock prices are cautious, showing greater interest in sound fundamentals. (CBS).
- The phenomenon is global. Yes, Silicon Valley remains the nerve-centre of technology. Yet developments in FinTech, and blockchain with it, have emerged from around the world. Globalisation has flattened the playing field, with governments scrambling resources to establish their footholds. With this profusion of locations, and variety of viewpoints, comes a dilution of the risk.
Ultimately the success of blockchain will be if or when the Man on the Street is convinced of its usefulness. As with dotcoms, to survive and thrive the blockchain has to decouple from the bitcoin buzz and be widely understood on its own terms. In January 2016, we are a long way from that.
— Caroline – Bowlah PR (@CaroBowler) January 21, 2016