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Blockchain – can the hype be fulfilled?

Coin Rivet columnist Jon Walsh explains how his original 'blockchain, not Bitcoin' approach has recently made an about turn

Like many people, I first got interested in Blockchain around the same time as the 2017 crypto bull run and ICO mania. I started as “blockchain, not Bitcoin”. It was the tech that was of interest to me and not the hyped, get-rich-quick craze that surrounded the space at the time.

A friend had given me the heads-up, saying the Said Business School was running a distance learning course on Blockchain Strategy, and having not long sold my last adtech company, I was excited to learn about this cool new tech that had the promise of returning trust to otherwise untrusted environments.

The macro concept of blockchain is amazing – it can bring transparency to any supply chain, proof of provenance to any item, give consumers an ownership of their identity and bring trust back to almost any industry, public, private or third sector.

Having advised two blockchain start-ups in the adtech space around M&A, tech stack, and business strategy, I’d had a chance to see up close how these companies operated. Both had good intentions, but both were fundamentally flawed in different ways, but the common denominators were the fundraising method (one had gone for an ICO, and the other was intending to), and both were entirely centralised and probably didn’t really need Blockchain to solve the problems they were hoping to.

Bad faith

I don’t believe that either of the management teams were acting in bad faith, but instead, just weren’t educated enough on the technology they were looking to utilise.

And herein lies the problem. From a business perspective, how do you build a blockchain company that is inherently decentralised, and not just another middle man being a rent-seeker by purporting to be the prophet of truth in any given industry?

Over the last year, I have been helping educate senior leaders of companies on what blockchain is, and how to use it. The starting place is always the following two points…

  • Companies do not need blockchain, industries and ecosystems do.
  • If you do not have multiple distrusting parties, then you don’t need blockchain.

So blockchain is the platform for working in cooperation with your competitors to solve common industry woes. Blockchain really isn’t a revenue generating technology, but a cost saving and efficiency driving one – not as sexy when you understand that.

But for competing companies to work together in any given industry, they first of all need to agree standards, and outside of regulated industries such as finance or gambling, not many industries do have standards they can agree on.

Provenance

Then we have the question of tying the physical world to a digital ledger and trusting this process through a supply chain as an agreed version of the truth. But how easy is that? If it’s tracking the supply chain and provenance of organic eggs, are we checking the eggs themselves with each one bearing a QR code? And even with that, how do we know for sure that those eggs weren’t just given that QR code and have any bearing of where they actually originated from? This is before we even get into what is the definition of the word “organic”.

You can consider this same issue for almost any real-world product and supply chain.

In digital advertising – a world I am very familiar with – there have been a lot of blockchain companies trying to solve the widely-accepted problems that exist with a “murky supply chain”. So let’s explore whether blockchain really can solve this…

The advantage of trying to solve something that already only exists in the digital realm is there’s no need to digitise anything. However, in the digital advertising supply chain, no one can agree on anything!

Fraudulent

When is an ad served? If we had that solved, the industry would not have the massive reconciliation issues it still does despite being more than 25 years old now. When is an ad viewed? The industry can’t agree on how much of it needs to be in-view or for how long still. Was the ad viewed by a human or a bot? Despite there being at least five different, and generally respected, anti-fraud companies in the space, even they can’t all agree on what ads are fraudulent and which ones aren’t.

Some of the issues in advertising tech can be solved by companies simply being committed to being transparent, and other challenges such as advertising fraud are far harder, and there needs to be a level of tolerance in the industry that there will always be some money stolen by smart fraudsters – banking accepts this, and even retail has a an acceptance that “x” amount of stock will be stolen over a given period.

I started by believing in blockchain, not Bitcoin, and now almost two years after getting into this space, I have done a reversal in this thinking and am now ‘Bitcoin, not blockchain’.

Maybe over the coming years, entrepreneurs and corporate innovators will actually be able to build blockchain solutions that have real world value and can return trust to currently trustless environments. But, for now, I’m not convinced.

Jon Walsh

Blockchain, Digital Assets and Adtech professional

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