Over the past two years, we’ve witnessed the cryptocurrency market explode onto the scene, minting billionaires overnight, followed by an implosion that has wiped out up to 80 percent of the market’s value. All along, the true believers have continued to insist that this is just the growing pains of a new and dynamic financial industry even as instances of fraud have further damaged the market.
The silver lining of the whole experience has been the rise of blockchain technology, which is expected to generate the real long-term value of the cryptocurrency wave.
So far, however, much of the public attention given to the blockchain has focused on startups that have built proof-of-concept blockchain products. Early-stage research and development have many issues still on the drawing board — but they are continuing to answer the questions.
There’s no escaping the fact, however, that blockchain projects have an astronomical failure rate, with some studies putting the number as high as 92 percent. Looking exclusively at the topline numbers is enough to write the blockchain off as yet another technological flash in the pan.
The reality of blockchain is far more complex and nuanced than was understood before. Blockchain is not unlike many industries that have survived — coming long before this phenomena.
The Reality of the Blockchain
While it’s true that the majority of blockchain projects have failed so far, a more accurate way to describe the situation would be to say that the majority of blockchain startups fail. We already know that the majority of startups fail — the greater part of new restaurants fails — the bulk of any new industry — well — fails. But we still have startups, and we still have restaurants. Google made it, Microsoft made it, the Internet made it, the much-doomed auto industry is still limping along. So what can we learn from these tech and non-tech take-aways?
Top line statistics include projects that weren’t viable in the first place, had part-time developers that couldn’t commit the time that their blockchain side-project demanded. Some of the blockchain startups never attracted enough financing in the oversaturated initial coin offering (ICO) market to even get started.
When you eliminate the projects fitting those descriptions, what remains is a collection of legitimate startups that didn’t make the grade — just as you’d find in any other technology space.
None of that means, of course, that blockchain is a bust.
There are already countless examples of blockchain technology already in use today.
Anywhere from the medical industry to forward-thinking ecommerce businesses, the blockchain is gaining a foothold in our everyday lives, and showing no signs of slowing down. The problem is that most of the blockchain tech has been built by some old-line companies that technophiles wouldn’t expect to be leading the charge into such a bleeding-edge type of technology.
Heads-up Blockchain Entrepreneurs — you have an opportunity — grab it.
If you look past the origins of old-line companies, however, some projects display the breadth and depth of the ways that blockchain will continue to be adapted to solve some significant global business issues. That, in turn, can serve as a valuable primer for tomorrow’s blockchain entrepreneurs to point them towards the kind of products that stand a real chance of success. Data security everywhere has a more exceptional edge with blockchain.
Here are some notable examples that barely scratch the surface in the nitch of Blockchain. These few companies listed fit the bill where blockchain is quickly moving ahead:
One of the most successful applications of blockchain technology to date has managed to fly almost entirely under the radar, owing to its nuts-and-bolts purpose and decidedly un-sexy industry: logistics. The platform, known as TradeLens, is a joint venture between tech giant IBM and global shipping behemoth Maersk. These two ventures aim to provide real-time information to every level of the worldwide shipping container industry.
Since its launch in August, the TradeLens system has already left the beta stage and is now in production use around the world, with more than 100 entities connected, including shipping lines, port operators, and even customs authorities in several countries.
At the time of this writing, the system had already captured close to 254 million unique shipping events, making TradeLens one of the most-used commercial blockchain systems to date. It’s also one of the few blockchain platforms that have seen enough success to have already attracted competition, in the form of new rival Global Shipping Business Network, built on Oracle’s blockchain technology.
Another blockchain-powered system that’s approaching mass adoption exists in an industry where you’d least expect it, but where it was most sorely needed. Tracr is the brainchild of long-time diamond industry giant De Beers group, and it’s designed to create certainty and transparency in an industry that has lacked both for centuries.
The system, which will track diamonds from the moment they’re mined, through the value chain, and into the hands of consumers, is aimed at curbing some disturbing issues in what many believe to be the oldest luxury business in the world.
Chief among those issues is the longstanding scourge of the conflict diamond trade which has plagued the industry for generations. Then, there’s also the task of authenticating natural diamonds at a time when lab-grown alternatives are becoming all but indistinguishable from their mined counterparts.
The system has already been used to track real-world diamonds on an end-to-end journey from mines to their eventual retail destination and is expected to be fully online early in 2019.
IBM Food Trust
There’s one company that’s been behind some of the most successful blockchain platforms to date, and it’s IBM. In addition to their partnership with Maersk that yielded the TradeLens system, IBM is also developing a number of standalone blockchain systems that are already seeing widespread use.
One of the biggest thus far is IBM Food Trust, a blockchain platform designed to provide transparency and traceability to the global food supply chain. The network was able to trace millions of individual food products from their origins to retail outlets during an 18 month testing period, and the system is now available for general use.
Already, global supermarket giant Carrefour has signed onto the project, making IBM’s Food Trust blockchain viable right at first launch. The system comes at a time when the global food industry faces some challenges, not least of which is a sharp increase in foodborne illness, making traceability a welcome feature.
According to early tests, the IBM Food Trust platform could reduce the time it takes to identify the source of a food-related disease outbreak to seconds — rather than days — which could save some of the estimated 3,037 lives lost each year in the US alone.
Interbank Information Network
Although cryptocurrencies were expected to revolutionize parts of the global financial system, it’s turning out that the blockchain is the real game-changer in the space. For evidence, look no further than JPMorgan’s Interbank Information Network (IIN), which is a blockchain-powered network that aims to speed up cross-border payments between global financial institutions.
It’s significant, not only because it’s the most adopted blockchain banking platform to date, with more than 75 institutions participating, but also because it’s one of the elder statesmen of major blockchain projects, dating back to 2017.
IIN’s developers are hoping it will be the eventual successor to the current interbank messaging standard, known as SWIFT, as it will facilitate international money transfers by decreasing the amount of time it now takes to resolve regulatory or other data-related delays. They expect such issues to be solved using IIS within hours, as opposed to the weeks required through manual processes like SWIFT.
The Blockchain Lessons Learned
Judging by these already-successful blockchain use cases, it would be tempting to draw the conclusion that there’s little room for entrepreneurs when so many moneyed interests are behind the biggest successes to date. The easy takeaway is that if you want to be among the 8 percent or so of blockchain projects that don’t fail, it sure helps to have billions of R&D dollars to invest (or to literally be IBM).
For everyone else, however, the real lesson to be learned here is that the most successful blockchain projects are those that seek to form a backbone service for a whole industry or market segment. In that way, it becomes possible to seek buy-in from multiple stakeholders, which increases the overall odds of eventual success.
That flies in the face of the ICO, go-it-alone route that so many blockchain startups have chosen over the last two years, and that in and of itself should be instructive. The bottom line here is if you have an idea for a blockchain solution, it’s best not to try and invent a new market alongside your new business. Instead, look for a market in need of efficiency or transparency facelift, and be willing to partner with as many industry players as you can. That’s the surest route to blockchain success in today’s environment – not riding the speculative wave that’s led nowhere for so many blockchain startups to date.