Blockchain is entering the valley of despair phase, and that’s a mistake Posted on : Feb 22 - 2018

I’ve had a number of conversations with blockchain-focused people over the past few weeks. In some of those conversations — particularly with engineers — there is a palpable excitement and a belief that this technology is going to end up being their life’s work. As one blockchain hacker told me this past week, “It’s going to be a multi-decade long battle against the technologies that have been weaponized against us,” referring to the technology of the attentional economy.

On the other hand, I’ve had significantly more morose conversations with investors who are starting to lose faith in blockchain as a medium for investment returns. ICOs are still happening, of course, and investors are still clamoring to gain access to the best ones. But there is a remarkable cooling of the excitement thermometer, particularly from investors who were investing for financial returns rather than faith in blockchain as a decentralizing force.

I see the past near-universal excitement around blockchain diverging along two arcs. The tinkerers and hackers exploring this technology have never been more enthusiastic, yet some of the financiers and investors exploiting the technology for profit are starting to lose interest and enter the valley of despair. But that’s a mistake because it follows the wrong arc forward.

The excitement around blockchain over the past few years has been intensified by the convergence of these two groups working in parallel. For a disruptive technology, blockchain managed to capture the imagination of investors shockingly early compared to its antecedents.

Take the internet, for instance. The early protocols and packet-switching technology was invented in the 1960s, and email roughly as we know it was developed throughout the 1970s. Yet, it wasn’t until 1995 that commercial websites were even authorized to run on the internet. Three decades passed before entrepreneurs and investors were able to invest in companies built on top of this technology.

Compare that to Bitcoin, which kicked off the modern blockchain movement. The original Satoshi white paper on Bitcoin was released in late 2008. The first run-up in prices happened in mid-2011, then again in late 2013, and then the most recent peak in early December of 2017. So the technology got about three years before it was the focus of intense investment speculation, which really hasn’t abated since.

We can see the difference in the arcs between the hackers and the financiers. The hackers of the internet played with this new technology, expanded its boundaries and functionality, and created new products on top of it for decades, mostly with no sign that any of their work would pay off monetarily. Today, the legacy of that work lies in the open-source community, which continues to push this technology forward. View More