Last April, I visited the Blockchain Expo Global 2018 in London, UK. With the exception of IBM and a couple of other mature companies, exhibitors were predominantly blockchain startups showcasing solutions covering multiple sectors.
Although most startups exhibiting were focused on the financial industry, the spectrum of potential, future blockchain-based solutions on hand also covered sectors such as ad-tech, luxury and consumer goods, energy trading, personal data management, digital ID authentication, and gaming. In other words, the array of blockchain use-cases presented at the Expo was wide enough to provide insight into current activity in this nascent space.
My main goal for visiting the Expo was to network and explore potential projects I can join and add value. Based on pre-expo research into exhibitors, I hand-picked 25 startups which intrigued my curiosity and in which I potentially saw a possibility to cooperate. I had a plan; however, instead of 25 opportunities, I encountered more hype than real solutions.
Only five of the 25 companies I approached were able to succinctly describe their solution and relate it to an actual clear use case. For legal reasons, I won’t name any of the companies; however, some solutions that were presented to me did not necessarily require a blockchain implementation, at least not in the short term. In fact, blockchain’s current issues of scalability and performance could negatively impact their product’s speed to market and adoption. When challenged, in most cases, answers shifted the conversation to their solution’s tokenized economy.
As my main goal was to find a project I can join, my conversations were a form of due-diligence. I treated each conversation as an investment opportunity. So, when the conversation shifted to a discussion around their token, I directly asked what is the benefit and core function of this token? Of the 25 companies, most were using Ethereum as their protocol. Therefore, their token is native to their protocol and is a fundamental component of the network for gas and other transaction fees. Yet, apart from one company, I never received this answer to my question. In most cases, it was all about future utility, and yes, an ICO.
At this point, I should clarify that many of the people with whom I’ve spoken admitted to lack technical knowledge and that their technical team is not available at the conference. I am not a technical person either; and yet, I was able to ask simple questions to gain insight into the validity for using blockchain. Moreover, this was a blockchain-based technology conference. Shouldn’t the people representing your startup have a basic understanding for the benefits and importance of using a blockchain as the underlying protocol for your use-case?
Some of the conversations reminded me of the hype during the Internet’s early days, when companies were able to add a “.com” to their name to increase their stock valuation or raise VC funds using “eye-balls” estimations. As revealed by the article a dozen companies that reaped rewards by putting “bitcoin” or “blockchain” in their name, the hype around blockchain today is no different and remains high.
I also came across a handful of promising startups who were able to succinctly describe their solution and why blockchain is key to the problem they were trying to solve. In addition, they had an impressive team on the ground who was able to answer my queries without diving into the technical aspect of their solution–a bright spot, but it was not the norm.
Unsurprisingly, all 25 companies were either in the process or were planning an ICO in May or later in 2018. It seems to me that most of these ICOs will be able to raise some or all of the funds they seek. However, based on my interaction with these companies, for the majority, a successful ICO will be hype-based rather than solution and team based.
According to Gartner’s July 2017 Hype Cycle (see chart below), blockchain technology is predicted to move from the 2nd phase, Peak of Inflated Expectations, to the third phase, Trough of Disillusionment, in 2018.
Given my experience at the Expo, Richard Kohl rightly states in his May 2018 article, Cryptocurrencies and Blockchains in the Gartner Hype Cycle, that we have yet to come close to the peak of the 2nd phase.
Blockchain will indeed transform and decentralize many, current businesses and business models. The future is full of opportunities to make use of this nascent technology; but it will take another bursting of the bubble for this transformation to really set anchor. The latter will only materialize once the hype will peak and we reach the Trough of Disillusionment. Despite Gartner’s prediction, I don’t see this happening in 2018. Do you?
Source: Shai Gilat