Clay Shirky, in Here Comes Everybody, writes:
“Communications tools don’t get socially interesting until they get technologically boring.”
Blockchain is definitely not boring. It will probably have a bigger impact than QR Codes and Prepaid Cards, but it may still fade into the sunset of overhyped technologies. It is exciting because that is a huge delta – change the world or dustbin of history.
I incline to the former – that Blockchain will change the world.
However, that promise won’t be fulfilled until Blockchain becomes technologically boring. This post looks at why that is true and at efforts to make it technologically boring.
War is exciting too, but not productive
The internecine wars among Blockchain technologists are really exciting for those on the front lines. For the rest of us, who cannot say anything technically profound about SegWit and Lightning Network and Proof Of Stake, it is alienating. Could we just get a product we can use?
The answer is no, not really, not yet. In this post we looked at the scaling challenges. TL:DR: there is still technical risk here. Or to put this another way, build a proof of concept, attend hackathons and conferences, issue Press Releases, but don’t bet your company’s future on this – just yet.
The technical debates are pretty ugly. It is like watching Blue and Red states in America. There is no middle ground and a lot of dialogue of the deaf – if I shout louder maybe you will hear me and agree with me. The Bitcoin scaling debate has rightly been compared to a Civil War within the Bitcoin community.
The reason that there is so much heated debate is that this is no longer just a cool computer science open source project. Real money is at stake. That makes people cautious. Yet it is broken today – as it stands, Bitcoin cannot scale. So there is technical debt and legacy code and innovators dilemma. Welcome to the real world.
Boring is good for employer, not employee
Java, the Cobol of the modern era is a good example. It is boring and for an employer that is a good thing. Java coders are abundant and inexpensive. As an employee, the words abundant and inexpensive signal bad news. It is much more profitable to be an expert in an obscure but hot language. Even better to be an expert in Blockchain. So few people really understand it technically and yet because the upside & downside for huge enterprises is massive and existential they have been spending multi-million $$$$ on Proof Of Concept projects.
The Multi-Million $ Proof Of Concept
Blockchain will make tea for you in the morning. Blockchain will also make you a better lover. Back in the real world, most of the systems that Blockchain is being proposed for could use standard database technology (aka boring technology).
The reality is that during bull markets, just the word “Blockchain” unlocked enterprise budgets.
For companies looking to avoid the Blockbuster fate a pitch that “this could be how we become the next Netflix” is beguiling enough to unlock multi-million $$$$ budgets for Proof Of Concept projects. Some of these projects cannot grow beyond POC, because there is still technical risk around scaling, but the prize is big enough so the budgets get unlocked. The POC is simply an option on the future.
You can take two views on this:
A. It is all nuts, all the money going into POCs is wasted because Bitcoin/Blockchain will never scale.
B. The scale of the opportunity/risk is so great that some wastage is normal and the cost of doing nothing is worse.
I incline to B but also think it could be done more efficiently.
Three Months and Six Figure POCs
Three months and budget in 6 figures is the normal rule for a POC if you cannot use the magic B word to unlock multi-million $$$$ budgets for projects lasting 12 months or more. Coding a prototype to show stakeholders is easy – it can be done in days or weeks. Before that some work to determine business strategy and the level of technical risk is needed. The key job is EAU (Education Awareness Understanding) for senior stakeholders. The ones making the big decisions need to understand Blockchain beyond the simplistic “it’s a distributed ledger” mantra. There is too much at stake to simply leave these decisions to technical people without any understanding of how it really works.
Two things to make Blockchain technologically boring
One should be able to:
A. Create smart contracts aka Blockchain apps as easily as building a mobile app with lots of free components and standard tools that millions know how to use.
B. Deploy to any Blockchain with any cyber currency with any validation scheme (Proof Of Work, Proof Of Stake etc) as easily as deploying to AWS or Azure or any other cloud service.
I can see enough progress both within Bitcoin (Segwit, Sidechains and Lightning Network) and Ethereum to feel confident that this will happen and while I cannot see exactly when this will happen, I do think it will happen. If not, then Bitcoin and Blockchain will disappear into the dustbin of history. Yes, there is a lot at stake in those technical debates!
It’s OK, we are Blockchain not Bitcoin
Then there is the enterprise wing of the Bitcoin party. Their line is:
“We don’t need Bitcoin. That can be a failed experiment and it won’t matter to us because we just need to scale to enterprise level and that is easy”.
Yes, it is easy to scale a Blockchain system to enterprise level, but the question is whether there is a good reason to use a decentralised consensus network aka Blockchain. This handy decision chart helps you figure out whether you need a Blockchain.
In the vast majority of cases, the answer is no. In those cases, enterprise tech companies like Oracle will happily sell you the technology that gives you what you need without any Blockchain. For a skeptical take on Blockchain by Oracle, read this. Moving from POC to enterprise deployment puts $ billions at risk. That won’t happen while there is technical risk.
That is why the “we don’t need Bitcoin because we are enterprise” line is suspect. If Bitcoin fails, it will drag Blockchain along with it. Technically we can insert a “better cyber currency” but if Bitcoin fails, the sentiment crash will kill Blockchain projects and Altcoins as well. The naysayers on the project approval committee will have a field day.
Google Deep Mind AI and Immutable trust without Blockchain
The headline where I saw this was in the Guardian and it did draw me in with “Bitcoin-like” in the headline. The use case is healthcare, but it applies also to banking as we will see later.
Hat tip to famed Femtech leader Efi Pylarinou for sharing this in her Twitter feed.
However when you dig below the surface of the headline, as is our habit at Daily Fintech, you get a more nerdy conclusion that reflects back to our core thesis that enterprise Blockchain could be a passing phase (albeit a highly profitable passing phase for vendors).
The big unknown in the enterprise Blockchain space is what % of the current enterprise Blockchain POCs turn into large-scale deployments.
The story about Google Deep Mind in healthcare was great tech reporting by the Guardian. They related some deep tech to a concern shared by millions – privacy of medical records.
“Google’s AI-powered health tech subsidiary, DeepMind Health, is planning to use a new technology loosely based on bitcoin to let hospitals, the NHS and eventually even patients track what happens to personal data in real-time.
Dubbed “Verifiable Data Audit”, the plan is to create a special digital ledger that automatically records every interaction with patient data in a cryptographically verifiable manner. This means any changes to, or access of, the data would be visible.
DeepMind has been working in partnership with London’s Royal Free Hospital to develop kidney monitoring software called Streams and has faced criticism from patient groups for what they claim are overly broad data sharing agreements. Critics fear that the data sharing has the potential to give DeepMind, and thus Google, too much power over the NHS.”
To understand the tech, dive into the blog post by the Google Deep Mind team to understand how verifiable data audit sounds like Blockchain but does not use a decentralized trust-less consensus mechanism to verify transactions.
What you will see sounds like Blockchain:
– immutable, append only: check
– Verifiable aka transparent in real time: check
– Merkle like tree structure: check
But it does not use a decentralized trust-less consensus mechanism to verify transactions. This makes it more efficient. There are no proof of work miners. Nor are there any as yet unproven consensus mechanisms such as Proof Of Stake.
The cost is some level of trust in institutions.
That pitch will resonate with the CXO suite at these institutions.
This is why I was writing as far back as November 2015 that the permission enterprise blockchain was a mirage beguiling both banks and IT vendors. This is like the Intranet phase of the Content Internet.
The big debate about PSD2, which we cover a lot on Daily Fintech, is who owns your banking data – you or the bank. Translate that to healthcare – where consumers care more about personal data and you have what Google is offering. Google is smart to launch first in Europe where consumers (and regulators) are more concerned with data privacy.
It’s binary. Bitcoin (and Blockchain) will either change the world or fade into the dustbin of history. When it does change the world (I think it will), then being a Blockchain guru will be about as exciting as being an HTML or TCP/IP guru today.
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