Crypto change – is it really different this time?

This year started with a crypto-explosion. Chris Larsen became the fifth richest man in America overnight, just behind Mark Zuckerberg. Two Harvard contemporaries of Zuckerberg, Tyler and Cameron Winklevoss, had become the two first public bitcoin billionaires just weeks earlier, when their  $11 million (£8 million) bet on Bitcoin in March 2013 rocketed by nearly 10,000 per cent.

Inevitably, within weeks of this high-water mark the market value of Bitcoin had halved, the wave had rolled back, and the top post on the central cryptocurrency board on Reddit gave out suicide prevention helplines and mental health advice.

Was that just a bubble? Or was it a correction on the way to an even bigger boom-and-bust later this year? Nobody knows for sure, although it’s a safe bet that the crypto-currency genie is now well out of the bottle, and an equally safe bet that selling your house to invest is a brave move even with the power of hindsight. On the bright side, you can now buy a replacement home in Bitcoin, unfortunately the developers are not yet accepting Tron, Neo, Stellar or Ether.

Plenty of commentators have compared the rise of blockchain technologies – of which the buccaneering world of crypto-currencies and tokens is perhaps the most visible and dynamic – to the genesis of the internet, or the industrial revolution. At this range, sifting the hype is almost impossible, but there is plenty of gold in the blockchain hills – and not just for the pump and dump wrangling day traders.

The real-world uses of blockchain are legion, and not all reliant on impenetrable ICO pitches and buzzwords. The billions already invested by big enterprise in blockchain as the ultimate notarisation service, a hacker-proof distributed database, point to thousands of specialized use cases and objectives, many already live and hundreds more at a pilot stage. However, this deep-industry use of blockchain is arguably the least of its benefits – merely the newest ‘best fit’ solution in the grey world of database procurement.

However, the power of public blockchain – as in the hundreds of Ethereum-platformed tokens – is immense. A good example is the Cryptokitties app craze, where for a chunk of virtual change (ETH) you can buy a unique digital kitten. That might seem an inconsequential thing to use a global public blockchain for, but the key point is that the entire transaction takes place on the ethereum blockchain – the ultimate demonstration of a low-friction trusted economic transaction. Begin to apply this frictionless model to media consumption, and suddenly barriers begin to fall.

There’s BAT (Basic Attention Token), fronted by Mozilla and Firefox co-founder Brendan Eich, intended to cut ad fraud and also reward publishers for quality content. Then there’s Imogen Heap’s Mycelia, a fair-trade music business that gives artists more control over how their songs and associated data is circulated and managed.

Or how about Musicoin, a token designed purely for music purchasing and tracking rights, which delivers a stream of Musicoin to artists when a track is streamed or downloaded. There’s Muse, with similar aims in mind, and ascribe.io, also offering digital rights tracking for creatives. Away from music rights, there’s Civil, a blockchain-based publishing platform, as well as the established Steemit, both intended to get writers and bloggers a more direct share of revenue.   

A key element of many blockchain concepts is decentralising currently complex areas such as rights management, which theoretically means creators get better rates, while online consumers get fewer interruptions and poor quality ads. The fact that the marketplace is somewhat crowded is more of a signal that these issues will be resolved one way or another, rather than an indication of confusion.

The number of these concepts we’ll remember in 10 years is a moot point, but some of the ideas, schemes and new approaches are genuinely innovative, and will change the way we interact with the commercial world for some time to come.

Finally, while the current boom may be making billionaires of the lucky few, consider that in many developing countries such as the Congo, Zimbabwe, Bangladesh and the Philippines, opening a bank account requires a minimum deposit of hundreds of dollars. This is prohibitive to the poorest getting access to traditional banking services. However, crypto-currencies offer up no such barriers (beyond transaction costs), so might come to represent the ability to make digital transactions for some of the truly disenfranchised.

This time, something really is different.

Mark Terry-Lush
mark.terry-lush@makehoney.com