I remained a cryptocurrency skeptics throughout the boom and burst cycle of 2017-2018. Cryptocurrency promises privacy, to displace financial institutions, remove the middle man and make transactions almost frictionless. In fact, there is no free lunch. Cryto transaction initiator needs to pay a gas fee as part of how the underlying algorithm works. Besides, the privacy that cryptocurrency enables would allows tax evader, money launderer to take advantage.
Blockchain, the technology that powers crypto-currency, is another overdue promise. Simply speaking, it is a distributed open ledger that transactions once occur can not be changed, which results in advantages like security (as you can not tamper with the data), resilience (distributed - duplicate over many machines), and transparency (it is open). So far, blockchain is still a solution looking for a problem. The financial sector may needs those advantages, but the cost of switching may currently outweigh the benefits. Most of the blockchain-based application now work to serve the crypto-ecosystem, which assumes that cryptocurrencies will go mainstream one day.
Blockchain may not live up to the hype it created, but the fanfare given to blockchain may help craft out a space for it in business application. Traditionally, businesses run on a wide range of systems and subsystems. Consider a retailer chain wanting to offer its customers the convenience of looking up a product’s origin, packaging and shipping. That would mean the retailer’s IT team need to work with its suppliers (which can be more than one), delivery partners to agree on a single format, shared API, such that one system can send request to one another for information it needs. Information flows slowly across the boundary of companies. Thus, the process can be long and laborious. Now, in a world where blockchain is such a magic word that IT managers are so eager to utter, they can at least quickly agree on a solution. Due to the open nature of blockchain and its logic engines (e.g ether smart contracts), independent teams can look up functionalities without having to wait for their counterpart to document everything. Since blockchain has been widely promoted, companies may already have invested resources in understanding it and humans capable of managing it. As a result, companies looking to integrate data can shorten the time to solution with blockchain. Everyone is likely to be happier, all thanks to the amount of money that went into blockchain’s publicity.
Having said that I was skeptical, I had my share of FOMO moment as well. Is it not nice to have the number in your account multiply. When ETH price plunged by two third, I bought in a tiny little amount thinking that the price had it rock bottom. A week later, the price chart sloped down again further. None of this matters to the diehard crypto believers. I bumped into one of the crypto-made millionaires in the after math of the crypto burst, the story was that crypto currency are on its way to bounce back, all be it a longer-than-ever-before journey. There are hope that institutional investors will pour money in this space once regulation is in place. It will be fun to watch how well this turns out another few years.