Did you hear about the blockchain?! Yes, better than the internet and bigger than the Beatles, it’s going to change technology as we know it! Or … it won’t. Yeah, it probably won’t. But damn, it sure does provide for a nice sales pitch, doesn’t it?
Don’t get me wrong, blockchain-powered platforms are interesting and will one day prove to be useful pieces of technologies, but right now the hype around them is overblown. A revolution like the internet, cloud technologies and machine learning? I think not.
As we ring in the New Year, maybe we can also sound the death knell for blockchain—or at least the hype-machine that surrounds it. The advent of distributed-ledger technology (DLT) was a case study in irrational exuberance. While there were always use-cases for DLTs, they became the embodiment of a hammer looking for a nail. T+0 settlement for US equities? Oh yeah, we can do that. Unparalleled security for the cloud? We’ve got you covered. High-speed trading without added latency? Sure, why not. Cure cancer? Go big, or go home!
Yet what we’ve seen is a whole lot of disappointment. Banks that were so eager to join one blockchain consortium or another, have staggered out of the room with little to show for their efforts. Highly touted proofs-of-concept were quietly swept away like dust in the wind. Even the lionized Blythe Masters has stepped down as CEO of Digital Asset Holdings, proving once more that you should not make idols in the worlds of crypto and blockchain.
We enter 2019 with little evidence that blockchains are truly better than traditional databases, en masse—same as it was when we entered 2016, 2017 and 2018.
For the October 2016 issue of Waters, I wrote a feature, Blockchain: The Revolution Has Been Over-hyped. Over two years later, I could easily use that headline once again to write another feature on the same topic. So where does that leave us? Trust me, the hype is still there. This year you will read numerous press releases and articles proclaiming that some fintech startup has raised X-million to help build their version of a blockchain panacea. Blockchain still sells as a buzzword and venture capitalists are still listening.
But here are a few things to keep in mind in order to help you to fine-tune your blockchain B.S. detector. First, it’s important to remember that in the last year, a plethora of industry “media” outlets have popped up to help promote the blockchain industry.
These publications are hardly independent and, as such, their coverage is often biased. Know the sources of your information. Furthermore, even for reputable mainstream publications, they can often get lost in the fog of tech hype. A major newspaper’s finance reporters aren’t as used to covering technology and they can accidentally fall into the role of carnival barker—it happened to me plenty when I first started covering finance (and, only later, tech) over a decade ago at American Banker magazine.
And in a nascent market, it’s not always easy to spot the fraudsters. Take, for example, the curious case of a Blockchain Terminal startup. Apparently, the startup, CG Blockchain, was created by Boaz Manor, the jailed former head of Canada’s Portus Alternative Asset Management who, upon release, reportedly started this vendor under an assumed identity, Shaun MacDonald. It’s an odd story that was first written about in The Block. The name of the startup caught my eye, though, because earlier in 2018, I had written a story about them. Tech giant FactSet had entered into a partnership in February that would allow users of FactSet’s order and execution management system to access CG Blockchain’s products through the latter’s app store, BCT Fundstore. (As this story went to press, FactSet had yet to provide an update on the relationship.) I didn’t speak with anyone from CG Blockchain; it’s lazy, but quite frankly all that mattered to me was FactSet’s involvement since that’s what our readers would care most about. It’s a lesson learned, and I’ve been covering tech at WatersTechnology for nine-plus years.
This is all to say that this is a confusing market that’s still ripe for hype. While small steps will be made on the blockchain front in 2019, bigger than the internet this is not. Be wary of anyone telling you otherwise—or at least ask for some tangible proof.
UPDATE: After this story went to press it was announced that FactSet has filed a lawsuit against CG Blockchain.
Bryan Cross, who heads UBS Asset Management's QED group, joins to discuss alternative data and AI.Subscribe to Weekly Wrap emails