Are we approaching peak blockchain, the currency’s much-hyped underlying technology?
"The valuation of [blockchain] technology today is… exactly zero.” - Hedrick-Wong
Blockchain has been the darling of the tech world for some time and increasingly so over the medium term, perhaps in part pushed by scorned crypto fanatics grasping for some justification of their obsession in the wake of the bitcoin collapse.
But unlike crypto, blockchain is real and tangible. It’s a technology seemingly here to stay; the market is awash with interest in it and a large number of financial institutions – including ANZ - have begun work on projects involving it.
Research suggests by 2022 more than $US11.7 billion will be invested in blockchain solutions, with the total value of the tech to reach $US3 trillion by 2024. Yet while the blockchain hype is unquestionable, voices questioning blockchain’s maturity and effectiveness are becoming louder.
In 2018 the CEO of Spanish group BBVA, Carlos Torres, suggested there were some significant challenges ahead for a technology he called “not mature”. Like many in the market he sees value in the application of the tech "when it is mature and the regulators are ready".
The question is when – or if – that will occur.
Writing in Forbes, professor and economist Yuwa Hedrick-Wong says the collapse of bitcoin has left blockchain “an invention looking for a viable commercial application”.
“Because… applications of the blockchain technology have yet to be realised, the valuation of the technology today is therefore exactly zero,” he says.
“This does not mean that blockchain is useless. It could be the transistor of the 21st century. Or it could end up in the garbage heap of technological inventions that failed to find a commercial application. We will have to wait and see.”
Kai Stinchcombe in American Banker is less subtle, questioning the existence of any practical use for distributed ledger – a blockchain is a form of distributed ledger - at all.
“Everyone says the blockchain, the technology underpinning cryptocurrencies such as bitcoin, is going to change everything,” he writes. “And yet, after years of tireless effort and billions of dollars invested, nobody has actually come up with a use for the blockchain — besides currency speculation and illegal transactions.”