Blockchain has its problems, but is it really completely useless? Given that most companies are implementing a fake version of a decentralized, distributed ledger, they may have a point.
Blockchain has its problems, but is it really the “most overhyped—and least useful—technology in human history,” as Nouriel Roubini contends? Or, is it merely a matter of “a lot of companies looking to use the blockchain are not really wanting a blockchain at all, but rather IT upgrades to their particular industry,” as Jimmy Song has posited.
It may well be a bit of both, or neither. But these views definitely suggest the blockchain antibodies have officially kicked in. So, what is it good for?
The Blockchain greed manifesto
If you’re Walmart, you want us to believe it will help to trace food through its supply chain. It’s unclear, however, why a decentralized, glorified spreadsheet is the right tool for that job, especially given that Walmart is using IBM’s centralized faux-blockchain to accomplish this.
Roubini (aka “Dr. Doom”), an American economist, has a penchant for expressing extreme positions, which is not to say he’s wrong in his criticisms of the blockchain. Is blockchain (aka crypto-mining) technology mostly shepherded by a few white males? Yes. Is most (two-thirds to three-fourths) crypto-mining activity centered in “bastions of democracy” like Russia, Georgia, and China? Yes. Is that crypto-utopia resulting in super-concentrated wealth that dwarfs even that of North Korea? Yes.
Where blockchain purports to be useful by real companies in real applications, it tends to be private, not public, and centralized, not decentralized. In other words, it’s not really blockchain at all.
But “the most overhyped—and least useful—technology in human history”? That’s perhaps taking the argument a bit too far. Every technology goes through its own “trough of disillusionment,” to use the Gartner phrase, but Roubini’s take pushes “trough” into “gorge that goes all the way to the center of the earth.” It may be too much.
A little perspective
After all, as Song has highlighted, while we may be over-selling blockchain, there are useful applications for it. It’s just that most of those applications are in finance, where (to Roubini’s point) some bad actors are discoloring the pool for everyone else. Given that “blockchain is very expensive relative to centralized databases,” not to mention hard to scale, hard to maintain, and brutal to control (yes, that’s the point but, no, most industries don’t actually want this), it’s important to call out where it’s a good tool for the job.
As Song has noted, that industry is money: “Unlike most industrial use cases, money is better if it doesn’t change. Immutability and difficulty in changing the rules is a positive for money and not a detriment. This is why blockchain is the right tool for the job when it comes to Bitcoin.”
Or is it? Roubini certainly doesn’t think so. As Roubini said: “No serious institution would ever allow its transactions to be verified by an anonymous cartel operating from the shadows of the world’s authoritarian kleptocracies.” He has a point.
Indeed, most industries, and companies within those industries, don’t actually want a decentralized approach to verifying transactions. “If you are a centralized service, a blockchain doesn’t get you anything that you can’t do a thousand times cheaper with a centralized database,” Song wrote. Most companies want a centralized service. For those that don’t, Song argued: “If you are a decentralized service, then you’re probably fooling yourself and not thinking about the single points of failure that exist in your system. There wouldn’t be a ‘you’ at all in a truly decentralized service.”
Which leaves us with finance to figure out blockchain without becoming even more fixated on enriching the 1% than it already is. Good luck with that.
