Even if a Thousand Projects Don’t Make It, Blockchain Is Still a Change Catalyst

This post is part of CoinDesk’s 2019 Year in Review, a collection of 100 op-eds, interviews and takes on the state of blockchain and the world. Gary Gensler is a professor at the MIT Sloan School of Management, Co-Director of MIT’s Fintech@CSAIL and Senior Advisor to the MIT Media Lab Digital Currency Initiative. He was formerly Chairman of the U.S. Commodity Futures Trading Commission, Under Secretary of the Treasury, and a partner at Goldman Sachs.

Gartner, an IT research and consulting firm, came up with a framework to look at the stages of adoption and market enthusiasm of emerging technologies.  Though criticized by some for being unscientific, the Gartner ‘Hype Cycle’ has caught on in popular culture. Where might cryptocurrencies and blockchain technology be now in that cycle compared with emerging technologies of the past?

Measured by market valuations, cryptocurrencies have experienced several booms and busts.  The Mt. Gox-led boom and bust of 2012 to 2014. The ICO boom and bust of 2017 to 2018. And more recently the tokenization and Facebook Libra led boom and, dare I say, bust of 2019.

Market values are but one measure and don’t necessarily equate with underlying viability of an emerging technology. While expectations have waned, might cryptocurrencies and blockchain technology still be at inflated expectations? Many minimalists would contend so. NYU economist Nouriel Roubini isn’t alone with his oft-noted doubts about cryptocurrencies.

Might the field be bouncing along the trough of disillusionment, awaiting signs of viable use cases?  

Joe Lubin, founder of Ethereum and ConsenSys, thinks so, finalizing the terms of his bet with Jimmy Song on the future viability of DApps. Song remains optimistic about the utility of bitcoin as a digitally scarce store-of-value, but remains decidedly a minimalist with regard to the viability of blockchain technology for other uses.

Through the mist of 2019’s hype of bold announcements, the crypto market’s ups and downs, and departures of hundreds of projects from the field, though, some ground-truths are evident.

This last point – crypto and blockchain technology acting as a catalyst for change – may not fulfill the heightened expectations of maximalists, but may be Nakamoto’s most enduring early contribution. This new form of private money and its underlying shared ledger technology already have been catalysts for central banks, big finance and big tech. Along with fintech innovations, crypto initiatives have spurred incumbents to update payment solutions and explore new approaches to finance and multiparty database management.  

To many observers, the question remains what uses will cryptocurrencies and blockchain have beyond acting as a catalyst for change? Beyond bitcoin providing a scarce digital speculative store of value, and niche applications in digital exchanges, gaming, and gambling, what applications will be sustainable for cryptocurrencies as a new form of private money? What will actually benefit from the shared multiparty ledger systems facilitated by blockchain technology?  

Actual adoption of crypto or blockchain technology projects rests on addressing comparative viability and value creation propositions. Foremost:

Though literally thousands of projects have yet to land on broadly adopted use cases, I remain intrigued by Satoshi’s innovation’s potential to spur change – either directly or indirectly as a catalyst. The potential to lower verification and networking costs is worth pursuing, particularly to lower economic rents and data privacy costs, and promote economic inclusion. Further, shared blockchain applications might help jumpstart multiparty network solutions in fields that historically have been fragmented or resilient to change. Even in this slightly less ambitious form – acting as an innovative irritant to incumbents and traditional technologies – cryptocurrencies and blockchain technology have already prompted real change and can continue to do so.

As an informed reader of CoinDesk, what do you think? Where might you place yourself on the scale from minimalist to maximalist?  Where might the Gartner team put cryptocurrencies and blockchain technology as we close out the 2020s?