Thanks to Facebook, Libra has brought the attention of the media industry back to the blockchain after the unfulfilled hype cycles of 2017 and 2018.
The promises of blockchain have been vast and large: micropayments, irrefutable audit logs, instant settlement, and smart contracts will change everything about how we operate within our industry. We’ve been promised business models that fairly reward everyone along the supply chain and a way to monetize content without resorting to bogging down the user experience with more ad units. The reality is that blockchain tech hasn’t moved the needle in any notable way and we’ve seen very little progress towards making any impact within the media industry so far.
In this article, we’ll take a look at the current state of blockchain protocols and products to help explain how far we’ve come. I’ll also offer some suggestions for setting your strategy and a simple reminder on what we can expect from here.
Surprisingly, still expanding in 2019
Even though the progress has not matched expectations, we’ve continued to see blockchain technology expand both as a highly strategic priority and in the number of notable projects growing.
According to Deloitte’s 2019 Global Blockchain Survey, the majority of respondents claimed that blockchain technology will be a critical strategic priority to their organization. Also, there was a 10% increase in the number of respondents reporting that blockchain will be a top-five strategic priority from 2018 to 2019.
On the development side, there are large numbers of new engineers working on blockchain projects. According to research by Electric Capital, they were able to sample over 20,000 blockchain projects creating 16 million lines of code to find that the number of developers working on public tokens and coins has doubled in the last two years.
Facebook has recently announced its intention to build their own cryptocurrency, Libra. The goal is to create a global payments system with smart contract functionality. As of June 2019, CNBC reports that over 100 people are known to be working on Libra, led by former PayPal president David Marcus.
Breaking down your blockchain strategy
If you’re currently in evaluating blockchain technologies, expect to get your hands dirty. You won’t find off the shelf software that “just works” to solve your problems.
One suggestion I make when evaluating how to move forward from here is to break down your assessment of blockchain technologies into three different buckets:
The technology at this layer is very generic and flexible: great from a pure technology point of view, but horrible for solving specific issues. Luckily, we now have years of educational material developed, conferences are selling out, and the new wave of developers from the last hype cycle has had time to deepen their expertise. The core protocols are the most stable part of the entire decentralized ecosystem, especially Bitcoin, which can be used for non-financial purposes in addition to being treated as money. Most likely, you won’t be using these protocols directly, unless you’re developing technology in-house or focused on payments with cryptocurrencies.
Example technologies: Bitcoin, Ethereum
On top of the core protocols, many blockchain projects are building a separate token that is creating a sub-economy that exists within its own network as a way to experiment with driving new behaviors. To properly evaluate these tokenized models, you’ll have to incorporate game theory in addition to domain knowledge and technical experience. In fact, “token engineering” is a new, cross-discipline area of research that is trying to create the tooling for rapid experimentation with the game theory models necessary to create sustainable networks.
Example technologies: Brave Attention Token, Livepeer, Civil, Po.et
Most blockchain applications could be classified as experimental, at best. The user experience for obtaining and using any cryptocurrency continues to be incredibly confusing. At first, there was a perceived need for separation between the economic and application layers in order to show off how open networks could change the status quo. However, many projects are beginning to blur that separation in order to more efficiently bootstrap their networks and hide as much complexity as possible to promote user adoption. Over-simplification might sell the original idea short, but it’s providing them the opportunity to gradually educate users and make the transition to blockchain-based products easier.
Example technologies: Steemit, Everipedia
Working together for the future
Blockchain databases solve one significant issue really well: how to safely coordinate that we’re all looking at the same information. Open, collaborative networks can lead to creating stronger systems over time because we’re incentivizing each user to participate in some way to give back value to the network.
My final piece of advice is to step outside of your own individual strategies in order to reach the technology’s full potential. At every layer, there will be new opportunities for disintermediation as long as we keep breaking up the bottlenecks. If you’re focused on building something only for your company or within a small group of partners, there’s a high probability that you’re not leveraging the technology as strongly as you potentially could.