Let’s start with a famous quote of Colin Powell: “A dream doesn’t become reality through magic; it takes sweat, determination, and hard work”. This is more than true for distributed ledger technology. If we look at the current state of all the distributed ledger projects and market expectations, we see that there is a huge gap. And huge as in Donald Trump “Uuuuggee!!”.
Although distributed ledger technology it is not that difficult to understand in concept, it is technological very challenging. Most of the progress in distributed ledger technology comes from greenfield research & development and involves a lot of trial and error. This combined with an uneducated market with unrealistic expectations creates a lot of forces that do not benefit the industry at all. Let’s look at the current state and see if we can bridge the gap a bit.
The market
Never invest in something you do not understand. Great one-liner that does not fly. For instance; do investment professionals in regular markets really understand the inner workings of their investments? In general, they do but if it comes to the nitty gritty stuff that can have a large impact they certainly don’t. If they did, Lehman Brothers would not have gone belly up.
I mention Lehman because the credit crisis of 2007 laid the foundation of Bitcoin, the mother of all cryptocurrencies.
The current market does not make distinctions between the different distributed ledger projects. According to the market, a network is equal to fork or a smart contract or even a meme. Yes, this is crazy. So, Mister Market, listen to this: yes, distributed ledger technology will change the world we live in, but I, Mister Industry, am way less mature than you think. If you compare me to the Dotcom revolution I am at the phase that I am not yet ready for mass scale adoption.
I am still struggling with the number of transactions I can handle per second. Even though I am already working for 10 years on one of my projects. This is because I am struggling with something that is called the “Scalability Trilemma”. You, Mister Market, need to understand that all my projects are software projects. And if you look at your own software projects, you see that it takes a lot of time to get something live that is good enough for your users.
I do appreciate that you are willing to take a bet on the future. Yes, I might be hyped a bit, but money accelerates technological advancements. And that is just what we need as we are in greenfield territory and I need all the help I can get. If you look at me, you will see a construction site and the buildings on this site are far from complete. I know that a lot of my buildings will be torn down. But I can promise you this, some of my buildings will be the skyscrapers of the future and you will be glad that you made the decision to own a brick or two in those.
The industry
If we look at distributed ledger projects and the networks that are created, we see that the holy grail regarding scalability has not been found yet. This is a “biggy”. Although fundamental mathematical improvements may help in this area, the fact is that a fully distributed network will always have scalability problems if we keep security in check. The solution will be to limit the number of nodes in such a network in a democratic way without compromising security. There are some promising initiatives in this field, but they are still in its infancy.
When we look at what is needed for full scale adoption, there is a hell of a lot to figure out still. Let me give just a few examples. How do we handle and standardize user identities? What about decentralized storage? Yes, we have cryptography in our core, but in most projects you can see very clear who is talking to who. From a security perspective this is at least, if not more, important than to know what they are talking about.
So, Mister Industry, listen to this: maybe it is about time you stop hyping yourself like you are the best thing since sliced bread. I, Mister Market, am fully aware that you eventually will change the world we live in. But if you keep sending the wrong signals, the only way I can make you listen to me is to dump everything I own of you. Yes, there you have it, I am as immature as you and I am not able to make a distinction between your projects yet. To me you are Mister Industry.
Furthermore, because I am immature, I do whatever I want, and I am not bound by rules. This means that some of my parts do not play by the book. I Kindly ask you to help me with that and give me the tools to control these parts. Yes, I am a gambler, but in the future, I will be more professional and I will be able to call your bluff immediately.
Also, Mister Industry, where is your face? It is time that your projects create a foundation which can lobby for them. Right now, Mister Politics, who is even less mature than me and who does not know jack shit about us is trying to create laws that originated in the land of golden bells, purple bubbles and unicorns. Yeah, I know, Mr Dinosaur is largely to blame as they want a piece of our pie.
So, Mister Industry, if we want this thing to happen we should work more closely. You know that we will have more than enough trouble with Mister Politics and Mister Dinosaur, they are not going to fold just like that. They are all in with their centralized models so everything is at stake. It is time we team-up. Like in the Byzantine way. If we do this, we will be friends for life and together we are going to party like its 1999 ;).
Mister Market, Mister Industry, Mister Politics and Mister Dinosaur, if you like this article, please share, clap ‘n tweet. You will receive my gratitude.