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Edgar Versteeg • 12 June 2018

My first impression exploring the world of blockchain

The interest for blockchain has grown rapidly over the last year. Main driver was most likely the publicity with the rise of the bitcoin currency, which let many go crazy in the hope to earn some easy cash. But as the rate of the bitcoin dropped drastically in January this year many pulled back, however the enthousiasm of the disruptive power of blockchain remained. At least so it seems ...

Blockchain is a powerful technological concept that combines some interesting and disrupting elements. The decentralised methodology disrupts the position of a central authority where the financial institutions are the most well known example. The fact that the nodes provide trust in the ecosystem and also rule out the concept of a single point of failure or control is a bonus. All data in the blockchain is validated by a consensus mechanism and it's practically immutability makes the chain transparant and trustworthy. Blockchain could provide stability and continuity. This is a big advantage in an area where the integrity and availability of data is easily compromised by cybercriminals. If you want to learn more about blockchain you can watch this interesting video on youtube (in Dutch).

Bitcoin has become very popular due the most media exposure late 2017 and early 2018. The risk of losing money due to the volatility in the market scams and the lack of regulation was emphasized heavily. The blockchain scene is surrounded by fortune seekers and ideologist, but where comes the business in ….? The blockchain community is still young and immature. Many startups are now entering the arena and the corporates are exploring the possibilities of blockchain. At least the banking sector seems active exploring new posibilities... as the impact of disrupting power of blockchain is thought to impact the financial sector heavily. Given the downfall and negative news about cryptocurrencies where does put us in the evolution of blockchain technology?

Research published by Gartner in August 2017, Top Trends in the Gartner Hype Cycle for EmergingTechnologies , shows that blockchain is arrived in an area of disillusionment. Reading about the possibilities of blockchain I cannot deny that most quoted comment is the fact that bitcoin is the only working use case. As I have spent some more time in research I do know that this is not true, but I leaves the majority in misconception. The lack of other successful showcases could be discouraging to board of directors. Or could it that they are too busy with their cloud migration strategy meaning that the blockchain is just to much to handle at this point.
Could it be that the knowledge and understanding of blockchain is still very low? Only 1 percent of CIOs indicated any kind of blockchain adoption within their organizations, and only 8 percent of CIOs were in short-term planning or active experimentation with blockchain, according to Gartner's 2018 CIO Survey. This leaves plenty of room for improvement to educate the C level at enterprises about the up and downside of blockchain technology. And not only C level, it's interesting for all involved in business development and innovation.

Jimmy Song published an article on Medium ‘Why blockchain is hard’ stressing the more realistic side of the coin. Being a relatively newby in the blockchain scene I try to educate myself by a lot of reading and attending several meetups in the ‘blockchain space’. Hereby I not specifically interested in crypto trading although the trading aspect is not to be avoided as we moving to a token economy (more about this in a later blogpost). My first impressions is that the blockchain scene still looking like a wild wild west with many very enthusiastic attendees most with an idealistic background. I share my expierences with an article Paul Baier posted on the Hackernoon. There is a lot of optimism in the ecosystem mainly on the disruptive power on business functions, however there are still not many working examples. At the techside there is a lot of sceptism that the blockchain concept is applied in many cases where there is no need and a more traditional (centralized database) solution would do the job.

Given all the sceptism, violatilty in the market given the uncertainity about the regulation of the industry combined with an industry still in it’s infancy it all is very interested to watch. An article by Matteo Gianpietro Zago published on the 31th of May on Medium highlighted an interesting overview of 50 real world use cases. The figure below indicates his prediction how the industry will evolve. Interesting this is contradictory to the Gartner figure above, which one to believe? It's hard to tell.

There is a lot going in the scene and I think all innovation should be encouraged as the most valuable insights come from experiments and given the innovative minds the opportunity to practice their ideas on new and existing business models. I find blockchain and the practical use cases very inspiring from both a business as technical perspective and am persistent to learn more. You can expect to read more about later to come. Do you want to learn more about blockchain please feel free to contact me.

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In February 2019 I was asked to provide a keynote to the staff of DIQQ and Q-GRP about the potential of blockchain technology. Below is a short summary of my talk. What is blockchain, and what are the benefits? In my view, the power of blockchain consists of three elements. Blockchain is a new technology that enables participants in a distributed network to securely exchange data. Network security is protected by applying cryptography. A well-known definition is a shared ledger containing all network transactions, accessible to everyone. This database offers maximum transparency, unlike other databases that are often shielded. Data and network security are maintained through cryptography, making it impossible to hack a blockchain or manipulate data. Today, cybersecurity is a significant concern, and when you look at well-known hacks (e.g., Mt Gox), you'll see that hackers targeted the exchange platform or wallet but not the blockchain technology itself. Blockchain technology lacks value without an ecosystem for sharing data. Its strength lies in being open-source technology, allowing anyone to contribute to the ecosystem. Additionally, in the decentralized network, peer-to-peer exchange of 'data' or 'value' is possible, a particularly powerful feature. No central authority or middleman is required, allowing for significant efficiency gains. Moreover, crypto-economics or game theory plays a crucial role in blockchain. This involves protecting the network by considering 'rules' and 'adversarial thinking' (‘What could participants do to disrupt the network?’). Designing the ecosystem and desired and undesired behaviors among all (decentralized) participants can be encoded using incentive mechanisms (tokenization and smart contracts), which holds great potential. The interplay between a well-designed ecosystem, game theory's design patterns, and applying cryptography to concrete customer needs or use cases determine blockchain's success. Blockchain in Practice Blockchain is a powerful technology applicable in various forms, often combined with existing technology. Experimentation with various blockchain applications is underway worldwide, focusing on creating value for customers and sharing information transparently and efficiently with chain partners. A well-known example is bitcoin, which can be viewed as an alternative economic system. The bitcoin network is supported by participants, with cryptography protecting the network and facilitating value transfer. Unlike the euro, there is no central party influencing the operation of bitcoin or the ecosystem. This brings several benefits. However, the governance of a blockchain ecosystem is crucial to prevent undesirable behavior, given the atmosphere of 'get rich quick' schemes and fraud surrounding crypto. Worldwide experimentation with blockchain applications is ongoing, with the potential to significantly disrupt existing platforms like Uber, Netflix, and Facebook. Smart Contract A smart contract involves programming transactions occurring on a blockchain. A blockchain can carry value (e.g., bitcoin), which is automatically disbursed when a transaction meets certain conditions. This means processes in the financial, legal, and logistics sectors can be significantly optimized, requiring fewer human interventions to monitor network transactions. Many startups and corporates are developing blockchain applications with the potential to have a substantial impact on the increasingly digitized world. Maturity Blockchain technology is still in its infancy. After the hype in 2017 and early 2018, things have settled down. Blockchain's strength lies in its ability to carry value (e.g., a cryptocurrency) and program desired behavior in the ecosystem, such as tokenization and the application of smart contracts. Although the value of various cryptocurrencies like bitcoin has significantly declined recently, many companies continue to experiment with blockchain technology with conviction. In short, the technology is still evolving, and finding the right use cases or product-market combination remains a challenge. In my role as a product owner, this is what makes my work so challenging! The full article can be read [In Dutch] on the DIQQ website

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