Blockchain is not the future but here is what
The bubble is growing. Everyone is talking about blockchain and cryptocurrencies. Companies are adding blockchain to their names just to get funding. Does this remind you of the machine learning bubble a few years ago? It wasn’t a
s big but we can relate a lot to how the tech industry is reacting. cryptocurrencies are causing a bigger bubble because the technology is truly open to everyone unlike machine learning which is a specialized skill.
Machine learning from conception to bubble
Machine learning was not a new concept in 2010s. aArtificial Intelligence came about in 1950s and 60s. Neural networks and Bayesian methods were created when but were not possible for large problem sets due to limitations, physical and financial, of machines. In 2010s machine learning in many forms became possible due to advances in technology that made computers cheaper, GPUs more widely available, especially in the cloud. Now anybody anywhere can run and solve huge problems in the cloud. This helped create a bubble starting in 2010s that reached it’s peak in 2016 according to Gartner.
The concepts were not new. Many people thought of the applications of machine learning a long time ago. Advances in computing is what made it feasible to ap
ply machine learning to detect faces on Facebook, customer movie preferences on Netflix and make Alexa understand your voice.
The real contribution of
machine learning is the new applications it helped created. The value of machine learning is in the economic value it provided society (made things faster, helped create more accurate MRI scans ).
Cryptography as foundation of cryptocurrencies
Blockchain in itself is a new concept, but draws ideas created a long time ago: decentralizing and sharing (everyone remember downloading music on LimeWire before iTunes). Blockchain and specifically cryptocurrencies are really based on technologies thought of in the 1970s, specifically cryptography using asymmetric keys.
Cryptocurrencies are built on the foundations of being able to securely exchange information and being able to identify the author of the information (the only person who has the private key to create the information). Everyone can read the information using a public key but they can never create the information without the private key. The idea is not new, and has been foundation for encryption on the internet, but only recent advances in computing (again mainly the GPU) has made this possible. This is what helped lead the revolution to cryptocurrencies.
Cryptocurrencies’ power is economic
Cryptocurrencies power doesn’t come from the fact they use the blockchain. The blockchain is an interesting use of technology but it is as interesting as any other piece of technology. Cryptocurrencies draw power from decentralization and freedom of government oversight.
The economics of cryptocurrencies are not well understood and they won’t be for decades to come. How will governments, banks and institutions react to them and how will money move?
Cryptocurrencies will change the world but not because it’s a blockchain revolution but more because its a revolution in how we think about money, economics and government control.
Fast transaction and smart contracts should have been solved a long time ago
Do you ever wonder if the car was designed in 1808 and built in 1870 and become mainstream in 1927 thanks to Henry Ford, why it is that only a few advancements have been made in fuel efficiency of cars? Only in the last 15 years or so have people really started caring about fuel efficiency, and this led to the increase in electric cars and them becoming mainstream.
The same way, the idea that transactions should be fast and that we should be able to build smart contracts are not new. People in the financial industry and every person who waited 5 days for a check to clear have wanted faster monetary transactions.
Many think that the blockchain is the solution to the above problems but it is not the only solution. Is it a solution but far from perfect (a huge amount of resources are wasted to complete a bitcoin transaction). The banks and financial industry didn’t really care about your 5 day check cashing. Many (if not most) banks today used mainframe computers from the 70s to support their systems. They have not invested in improving the systems to make them faster as much. I bet we could come up with a better solution to faster transactions problem that is more resource efficient than cryptocurrencies. What about a blockchain with no crypto?!
Identity management is what will come from Cryptocurrencies
When I read online about applications of blockchain technology, many are identity management applications. Those applications are now feasible because computing power allows us to compute and secure data better not because blockchain in itself provides advantage.
I think the biggest outcome of the technology will be having social networks where each persons identity is verified and secured.
Imagine having a unique identity that is unique to you and can’t be forged. Now image that all your information can be secured with keys you own, including all your medical records, etc).
Now assuming you have an identity that is unique and we have a voting system, we don’t really need a blockchain to detect duplicates. We don’t need decentralization either in a way. A public ledger needs not be a blockchain.
How long before the bubble bursts? A year? Two? Five? 10? We have to live and see.
*I am not a blockchain, security or cryptocurrency expert. I am sharing my opinion to stir discussion. Comment below if you disagree