With over $6.6 billion spent on blockchain solutions, tech enthusiasts believe it is the future of technology. Some traders believe that blockchain is a “magical” advancement that can change the global financial industry.
But is that really the case?
The highest market value of blockchain is in the finance industry, especially banking. Even then, a survey showcased that the blockchain adoption rate is still 1%.
And, these statistics leave you to wonder about blockchain’s operations, efficiency, and effectiveness. Is it truly the future or just another technological fad?
A Trip Through Blockchain’s History
Some believe that the initiation of the blockchain protocol was by the cryptographer David Chaum back in 1982!
However, you can trace back the origins of blockchain to 1991, making it a thirty-year-old entity. W. Scott Stornetta and Stuart Haber made the first mention of a chain of blocks secured by cryptography.
Their main motive was to create a secured system for document timestamps.
After that, in 1998, the world got an introduction to a decentralized digital currency by scientist Nick Szabo. Furthermore, Stefan Konst published a dissertation that theorized his idea about a blockchain-like cryptographic chain.
In 2008, the first-ever conceptualized model of a blockchain came into existence. There is still a mystery behind who created the digital currency called Bitcoin. However, the developer(s) presented themselves under the Japanese pseudonym, Satoshi Nakamoto.
For the next six years, bitcoin ruled the cryptocurrency world. Now, the market capitalization of bitcoin usually stays in billions and is used by millions irrespective of its volatile nature!
And, in 2014, the separation of the underlying technology dictating bitcoin started.
Interorganizational cooperation now uses this blockchain technology for financial transactions. Even then, huge companies like Ripple decided against implementing blockchain applications in their business. Instead, they created their cryptocurrency called Ripple.
Therefore, marking the second era of a fad in the blockchain evolution.
The Fake Realism of Blockchain
Contrary to what gets marketed, blockchain is not a recent technological innovation. The idea existed from the early 1990s.
The only benefits you can reap from the consensus mechanism of blockchain are record transactions and stock exchanges. Therefore, a newer mechanism infused with a more advanced artificial intelligence can replace blockchain.
Blockchain is not as “unique” as it claims to be. As mentioned before, the concept of the chain of blocks secured by cryptography can be easily mimicked.
Even then, crypto enthusiasts consider blockchain to be their holy grail that gave birth to the world of cryptocurrency.
Just like bitcoin’s volatility, the same fate can befall blockchain technologies as well. In some countries, crypto transactions were barred due to their weak legitimacy. Moreover, blockchain is the underlying software used to create cryptocurrencies.
Some Governments barred this because of their inability to control and monitor its flow. So, it is plausible for illegal activities to channel into these transactions. Along with that, the reliability and risk management for blockchains is on thin ice!
The False Security of Blockchain
Blockchain technology has not reached a state where it can seldom protect the management of any organization. Therefore, opening up negative avenues like risks, scams, etc.
Did you know that the cryptocurrency market loses around $9 million in scams every day?
These scams include fraud, phishing, hacking, and data theft. And, guess what? Blockchain’s very essence is to eradicate these fraudulent activities and data thievery!
Breaching the blockchain firewall seems easy because of the eight hacks that took place in four months. It resulted in a whopping loss of $729.03 million! Market professionals estimate that the hacks will increase.
All of these allude to the fact that the blockchain ecosystem is not safe.
Contrary to that, recovering security keys and passwords for a crypto network seems exceptionally hard. For example, QuadrigaCX has over $190 million that the company cannot access because its founder passed away. That amount is now lost in the digital world, making procurement futile!
These can have negative repercussions on the economy if the numbers rise. Therefore, the benefits that blockchain offers can be bypassed by serious implications like loss and scams!
Blockchain – A Financial Fad
Even with the risks, people are getting intrigued by the use of Bitcoin and Ethereum. It is mostly due to the $2 trillion market value! However, the more capital it gains, the more volatile it becomes.
The market saw a 30% plunge in Bitcoin’s value this year along with other currencies. So, the question “Is blockchain a fad?” is a two-layer answer.
In its essence, blockchain is a revolutionary technology, but there are risks just like any technology innovation. Only time can tell whether Blockchain is a fad or a promise of financial and social innovation.
You must log in to post a comment.