Crypto: Not What It Seems.
“Blockchain not bitcoin” emerged in 2018 as an attempt by enterprise projects to capitalize on the market’s performance woes – the new version does the same but swaps in “crypto” to reflect the ecosystem’s spread.
Déjà vu. You know that feeling, when you momentarily are not sure of where you are in the timeline and you wonder what you’ve missed. We’re there now.
The “blockchain not bitcoin” chorus seems to be re-emerging, taking us back to the 2016-18 heyday of thematic and platform consortia convinced that the benefits of greater efficiency would overcome corporate competition. Bitcoin was an asset with no backing or clear utility, the implied argument seemed to go, whereas blockchain, well that was a technology.
Noelle Acheson is the former head of research at CoinDesk and Genesis Trading. This article is excerpted from her Crypto Is Macro Now newsletter, which focuses on the overlap between the shifting crypto and macro landscapes. These opinions are hers, and nothing she writes should be taken as investment advice.
Last week, Goldman Sachs CEO David Solomon wrote an op-ed for the Wall Street Journal titled “Blockchain Is Much More Than Crypto,” in which he reminded us of the potentially far-reaching impact of tokenization and peer-to-peer payments and drilled down on the benefits of risk reduction and settlement speed. Last month, Citi published the results of a survey showing that 92% of participating institutions see value in tokenization while 88% are either exploring distributed ledger use cases or actively participating in blockchain projects. Over the past few days, the Red Cross talked about ongoing work on a blockchain-based aid distribution prototype, and Japanese banking conglomerate Sumitomo Mitsui Financial Group announced plans to work on soulbound tokens for digital identity.
What’s going on? Is this part of a post-FTX “reset,” a cathartic back-to-basics? Or is something else in play?
Both. Yes, we are likely to see more public discussion about distributed ledger efficiencies and less about crypto asset trading and investment. This is a natural reflex after the damage done by layered leverage, flimsy tokenomics and trading fraud, and some high-profile reminders that crypto is not just about greed are more than welcome.
It is also an acknowledgement that there is a constant battle for attention, and the “X not Y” model assumes that only one variable is worthy. “Blockchain not bitcoin” emerged in 2018 as an attempt by enterprise projects to capitalize on the market’s performance woes – the new version does the same but swaps in “crypto” to reflect the ecosystem’s spread.
So, a large part of this is a cyclical narrative shift. But there’s something else going on as well. This shift comes on top of a longer-term tale of technological evolution and shiny things.
The last wave of blockchain hype may not seem to have produced much value. Pilots and proofs of concept involving lettuce, plastics, even (alarmingly) nuclear weapons seemed to deliver no practical utility. Groups working on blockchain use cases for trade finance, healthcare, telecoms, insurance and more have either gone quiet or been wound down.
And we have seen some recent high-profile distributed ledger failures. A couple of weeks ago, IBM and Maersk announced the closure of their blockchain-based supply chain joint venture TradeLens. Last month, the Australian Stock Exchange (ASX) canceled its much-hyped blockchain project after years of delays and cost overruns. This summer blockchain-based trade finance initiative we.trade, backed by IBM and 12 major European banks, went into liquidation and B3i – a blockchain insurance venture backed by more than 20 insurers and reinsurers – ceased operation.
So, the “please, not again” discomfort at the renewed protagonism of “blockchain” potential is understandable and even healthy (inflated expectations of any sort should be kept in check) – but not necessarily correct.
Both hype and failure are a natural part of a new technology’s evolution. Remember the dot-com bubble? That wasn’t just about crazy stock valuations – it was as much about the promise of rapid societal change, with business models rewiring their engagement models and individuals flourishing in their new-found creative independence. In the early days of any radical innovation, manifesto and prophecy often get confused, and experimentation – of which failure is an integral part – is the only way to test the bounds of reality.
See also: Central Banks and Bitcoin: Closer Than You Think | Opinion
You’re probably wondering where the successes are, and that’s fair because they don’t…
https://www.coindesk.com/consensus-magazine/2022/12/13/blockchain-vs-crypto-not-what-it-seems/
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