Blockchain, once the darling innovation of tech pioneers and investors alike, may no longer be having a moment. The digital ledger technology which allows for the distribution of digital information, was touted as the foundation for a new type of Internet. Although its initial use case was for the digital currency, Bitcoin, the tech community rapidly devised numerous other potential use cases for the technology. All of a sudden, it seemed the potential for disruption by this innovation was everywhere. Undeniably, “blockchain” would top any list of ideas and jargon for 2018.
As 2018 winds to a close, however, it seems the bloom may be off the rose, so to speak. There are two primary drivers of the fading infatuation with the technology: residual damage from the fall from grace of Bitcoin and other cryptocurrencies, and a failure to “walk the walk” with regard to its promise.
First and foremost, as it is nearly impossible to extricate blockchain from cryptocurrency, it is only natural that as the value of bitcoin plummets, so, too, would that of the technology intended to support it. Cryptocurrencies have steadily lost value throughout 2018, and are currently nearly 80% off of peak rate. Many are starting to question whether the cryptocurrency experiment has failed. As the news of illegal operations, vanishing funds and uneasiness with the concept multiplies, organizations tend to be shying away from aggressive plans to implement. In fact, with the term blockchain acquiring somewhat of a tainted reputation, with companies leaning towards the more news-neutral acronym DLT, short for distributed ledger technology.
Additionally, in spite of the potential for numerous applications, a deep dive into 43 actual execution initiatives for blockchain has shown a failure to actually successfully implement it in even a single instance. There are some fundamental barriers to adoption, aside from the emotional ones listed above. In fact, truly defining the value of the concept, when other means for accomplishing the same goals already exist is a huge challenge. Notable, too, is the immense carbon footprint required to generate the computing power needed support blockchain applications. Combined, it is difficult to purport that blockchain is a sensible business investment.
Analysts are predicting that a “blockchain winter” in 2019, as a lack of results and apprehension about the technology lead to diminished excitement and reduced initiatives. It remains to be seen whether or not this is simply a technology a bit ahead of its time, or destined to simply fade away.
