Don’t believe the digital asset hype, Prof Kevin Werbach

That’s the view of Kevin Werbach, Professor of Legal Studies and Business Ethics at the Wharton School of the University of Pennsylvania, and author of the new book, The Blockchain and the New Architecture of Trust. 

Speaking to Ripple, he said that in the next year we’ll see which of the platforms and applications that road the boom starting in 2016, fail to achieve escape velocity, and that will bring some clarity to the market. “We’ll get greater clarity from the regulators, including pathways for companies to come into compliance without destroying their value proposition. Corporate adoption will be a slow process for a while, but it will be substantially farther along a year from now,” he commented.

In a decade we’ll have some killer apps, he added. Some will be in restructuring traditional markets, like financial trading and payments platforms. Others will be new decentralised tools that didn’t exist before, perhaps prediction markets, content micropayments or microgrid energy trading. 

“Everyone will look back and say, “duh, that was obvious!” But you never know ahead of time when the solution and the timing will match up to spark massive adoption. I wouldn’t dare predict the price of any cryptoasset ten years from now, but I’m absolutely certain the overall market — in terms of developer activity, platform transactions and corporate/government adoption — will be far bigger in a decade than it is now.”

In terms of use cases that are more ideal than others for digital assets blockchain technology, he flagged up the Whoppercoin — “an ICO that was essentially just a loyalty point system for Burger King customers in Russia. There was no reason whatsoever why a blockchain was needed. It was all probably a humourous marketing campaign, but the scary thing was that, during the boom last year, you really couldn’t tell”. 

“In general, you always need to ask, “Is this a real and substantial problem to be solved,” and “why won’t a traditional technology solve the problem just as well, if not better?” The best use cases are ones where either the cost of trust (typically in the form of layers or intermediaries) is a problem, or where there is a “trust gap” among coordinating entities. The first explains most cryptocurrency or digital asset uses, while the second represents the enterprise applications. Payments, where Ripple is active, have aspects of both.”