Blockchain is in quite a precarious position right now. On one hand, it has received incredible attention thanks to last year’s cryptocurrency boom and on the other, the boom also made many overlook blockchain’s diverse applications. Now that the cryptocurrency market has seen a bearish market for more than seven weeks, the skepticism has somehow rubbed off on people’s view of the technology itself.
This negative sentiment does a disservice to blockchain’s recent positive developments. As an emerging technology, blockchain has to be perceived as a stable and secure technology with practical and real-world use for it to gain wider acceptance. The industry would do well looking at how cloud computing was able overcome the doubts brought about by initial security concerns. Healthy coopetition among cloud computing players led to major improvements. Today, the cloud computing enjoys widespread acceptance with a market that’s on track to be worth $411 billion by 2020.
Fortunately, various blockchain players have acknowledged this and are finding ways to improve on the technology through collaboration. The Hyperledger project, for example, saw tech giants like IBM, Intel and Cisco band together to collaborate on enterprise blockchain technologies.
Startups are also finding synergies. Blockchain solutions platform Ark, for instance, allows for interoperability between blockchains rather than serve as a direct rival to platforms like Ethereum or Neo. Fusion, which announced this week on successfully raising approximately $50 million in the first day of its ICO, is another blockchain project that seeks to provide cross-blockchain and cross-organization transactions and smart contracts for cryptofinance.
There’s also the Interoperability Alliance – a collaboration between blockchain ventures that aims to connect various blockchain protocols and establish industry standards. Currently composed by Aion, ICON and Wanchain, the group seek to collaborate on improving blockchain scalability and adoption by sharing standards and research. Collaboration and coopetition is starting to create a stable landscape which could help propel blockchain to the mainstream.
Interoperability brings flexibility
Unlike other technologies such as cloud computing, where developers have the flexibility to patch together tools and services from various providers, blockchain has limited interoperability. This isolation of systems seems to go contrary to today’s computing trends where applications and services are encouraged to share functionalities. Improved interoperability could create a richer ecosystem of blockchain apps and services that could address much more use cases.
Platforms like Ark seek to promote interoperability through its SmartBridge technology. SmartBridge essentially allows developers to trigger events on one blockchain through another. Enabling this allows for various decentralized apps (dapps) to work with each other even if they use different blockchains.
According to Ark’s cofounder Travis Walker, “With Ark’s SmartBridge Technology every coin becomes even more powerful, every app produced on any blockchain has the potential to reach a greater audience and even bitcoin can gain the functionality of every altcoin through a simple blockchain token called ARK.”
Cross-chain interoperability could spur on the growth of verticals such as cryptofinance. Fusion aims at becoming the “blockchain of blockchains” and serve as an inclusive financial platform. Fusion uses distributed nodes to manage and control private keys for various coins. This then provides means for the platform to tap into various blockchains and enables the creation of cross-blockchain smart contracts. Cross-blockchain smart contracts would allow developers to create applications that feature more complete financial functions and capabilities.
“I started thinking about how to really apply blockchain technology to the finance industry about 2 years ago,” Dejun Qian, cofounder of Qtum and Fusion, told me. “It seemed as if one would use Information Technology to improve postal office, instead of inventing the “email” system, creating a weird and heavy postal system, may be improved a little bit, but not efficient. But today we are at the edge of entering a new era, in which new technology totally disrupts existing models and institutions. There are thousand of cryptocurrencies already existing, yet were missing financial functionality. And I saw that, if we build a layer on top of all these crypto currencies and tokens to enable this functionality it will bring a lot of value to the world of blockchain. Sort of like the ’email’-like invention did for the internet.”
Competition creates solutions
Wider adoption of blockchain also relies on addressing nagging issues such as scalability and speed. For example, despite being the top cryptocurrency, Bitcoin has been hampered by slow transactions. Transactions theoretically take at least ten minutes to be confirmed though in reality this could take hours depending on the Bitcoin network’s load. Ethereum is also plagued by similar speed issues.
Ethereum co-founder Vitalik Buterin acknowledges that the rise in the blockchain’s users is putting scalability concerns on notice. He writes, “With the Ethereum blockchain reaching one million transactions per day, and both Ethereum and other blockchain projects frequently reaching their full transaction capacity, the need for scaling progress is becoming more and more clear and urgent.”
Luckily, this is an area where competition encourages developers to improve on their core technologies. Ethereum developers are set to address this through an update. Others like NEO and Waves have built their platforms to avoid being hindered by these concerns.
Still, these updates often do not come out instantly. Developers looking to quickly implement blockchain may have to settle on a particular platform based on a singular need rather than being able to choose one that covers all their requirements. The emergence of industry standards would help create a baseline for the expected capabilities for these platforms.
Coopetition drives progress
It would ultimately do blockchain startups plenty of good if they move past the ICO craze and focus on actually delivering value. Trying to outdo each other in terms of ICO results or coin market capitalization lets them lose sight of the real picture. True competition lies not in the highly speculative arena of crypto trading but in how well they could actually serve their markets.
Aside from pursuing interoperability and seeking out competitive advantage, blockchain ventures could also look into forging partnerships.
There’s plenty of opportunity to cooperate given the variety of verticals that blockchain startups seek to disrupt. Several firms are finding success in this. For example, blockchain microfinancing and remittance service Everex partnered with decentralized credit scoring application Bloom to share data and allow both to improve their capabilities.
As with any industry, many blockchain startups are statistically bound to fail. However, a concerted effort by all stakeholders to build quality applications and services could help uplift not only blockchain as a technology but also people’s perception of it. Blockchain may finally take its place as a mainstream technology once this is achieved.
Original Article by FORBES / Omri Barzilay: Contributor /2018