No doubt: There has been (and still is) a lot of hype around crypto currencies like Bitcoin. However, when reading recent commentaries in various media comparing today’s situation to the Dutch Tulip Mania in the 17th century it seems obvious that these commentators may not have fully understood what Blockchain, the technology behind cryptos, is all about. The statement in the end is that cryptos will be dead but blockchain will survive for the operation of transaction platforms. That’s true only to some degree and yes, the Kodak share sky-rocketed after the company’s announcement to issue their own currency!
However, news was not about the coin, it was about the trading platform for photographers. The coin is “only” there to allow real time transactions, also transferring the agreed price for a photo – from a few eurocents to bigger amounts for package deals – in real time: Contract signed, money in the right holder’s wallet, period! Therefore, transaction platforms only work with a coin connected to them.
Of course, in today’s hype period there is a problem and I would say it’s a big one: Volatility! Why should I give away my Bitcoins (or any other crypto) when I expect its value to double, let’s say, in the next six months? On the other hand, why should I accept a payment in crypto when I have to expect it’s losing value in the foreseeable future.
If the hype is hot it will be hard to establish a full blockchain based trading (or transaction) platform. It is only a question of time that it will happen. First attempts of regulation are made, by national initiatives that do not make lots of sense since cryptos are a global phenomenon. French president Emmanuel Macron’s initiative to bring the issue to the next G20 seems to be a better approach. Of course, there will be detours and delays for sure. But in the end crypto currencies along with blockchain are likely to become an integrated part of our everyday businesses.
However, regulating cryptos will not the only problem to be solved before blockchain will be as disruptive to all industries as can be expected! The high consumption of energy to create a transaction or coin will be a topic of many debates soon. Following discussions around so-called e-mobility we learn that power supply is already critical. If transactions via the blockchain become the rule, demand for electricity will further explode and will create immense shortage or wasting our planet.
There are blockchain companies out there already opting the energy surplus of entire countries to secure supply for the demand generated when all business blockchain takes off. There is an investor who actually expects e-mobility to be stopped for the time being because he believes blockchain to become the global priority. Environmental activists and lobbying groups would not like this for sure.
There seem to be alternatives. Hashgraph for instance, a technology that promises much less energy consumption and, while blockchain is limited to eight processes per second, hashgraph promises over 20,000 processes during the same time. The reason for this increased capability is that there is much less calculation required in the data block’s head than in blockchain. However, that’s exactly what creates the extra layers of security making blockchain unhackable to this point. Less security may be an option in some cases but not as a rule.
There is war ahead. In the end it seems very likely that Blockchain will prove highly disruptive to the way we are all doing business around the globe. To predict when this will be – again – is highly speculative. I may happen very fast, as some predict. I fear the quarrels and delays will take their time. Judging from that, to think it will not happen would be another mistake.
Better be prepared!