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The danger of blockchain as a catch-all phrase

Denis Pitcher

The year was 1995. Then computing expert and 20-year internet user Clifford Stoll published an article in Newsweek magazine outlining why the internet would not live up to the growing sense of hype.

It was titled “The internet? Bah! — Hype alert: Why cyberspace isn’t, and never will be, nirvana”.

It’s easy to look back and laugh in hindsight at how astonishingly wrong some of his predictions were, although it is also curious how stunningly accurate some less obvious predictions were. It goes to show how difficult it is to predict the future and that no one really knows how things will actually turn out.

Mr Stoll summarised the hype by suggesting: “Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities.

“Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic.”

Mr Stoll called this out as being inaccurate and unrealistic. “No online database will replace your daily newspaper,” he proclaimed.

He poked fun at the idea that a clunky computer could replace a pleasant book. “Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the internet. Uh, sure.”

He continued by lambasting the idea of online shopping as unrealistic. “We’re promised instant catalogue shopping — just point and click for great deals. We’ll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obsolete.

“So how come my local mall does more business in an afternoon than the entire internet handles in a month?”

In time, Mr Stoll has been proven to be embarrassingly wrong on those points.

“Enough so that for a 20-year recap in 2015 with The Los Angeles Times that he told the reporter he hasn’t read the piece since it was originally published.

That is unfortunate, as hidden within his predictions are some gems of accuracy.

He lamented that the internet made it so that “every voice can be heard cheaply and instantly” and warned that it can be overwhelming and predicted much of what we experience today with social media.

“The cacophony more closely resembles citizens band radio, complete with handles, harassment and anonymous threats. When most everyone shouts, few listen.”

He also accurately predicted some of the modern-day challenges of identifying facts versus fiction.

“Internet has become a wasteland of unfiltered data. You don’t know what to ignore and what’s worth reading.”

He was right, as much as we have progressed, it has still brought new challenges.

Predicting the future is incredibly difficult. There is a lot of hype and it can be difficult to sift through it all.

If you had read Mr Stoll’s piece shortly after the e-commerce bubble burst most of his predictions would have been very prescient.

Given more time, it has become more muddied. Some of his predictions have been startlingly inaccurate and yet others were the opposite.

In time, more of his predictions may prove false and others may prove to be more true than we had realised. How long that could take is unknown.

What is clear is that “cyberspace” and the “World Wide Web” weren’t magic that fixed all human woes; they were a complex representation of a future we had yet to really understand.

They were confusing enough that we simply don’t use these terms any more because they were a catch-all for everything to the point where they became meaningless.

This brings us back to the predictions of today around cryptocurrencies and blockchain.

In the same way it was difficult to predict the future of the internet and to understand how it would change our lives 20-plus years in the future, the same could be said of blockchain.

We simply don’t know what the future has to hold.

A leading figure in local industry recently told me he wasn’t convinced that cryptocurrencies or digital assets had any merit for Bermuda’s future.

“I understand blockchain”, he told me, assuring me that he saw a future in blockchain, but not digital assets.

The example he gave was curious. He had read that Hilton was pioneering work with blockchain and stood out as a real example of the application of the technology. I was curious and a bit sceptical.

What multiparty trust problem does Hilton have that it is aiming to solve? He wasn’t able to provide specifics, but was convinced that blockchains are good, digital assets and crypto are bad, and that Hilton was proof.

The trouble is that the only case of Hilton working with blockchain I could find was a company looking to create a property revenue management system powered by a loyalty token that announced a partnership with Hilton a month before it was to do an initial coin offering.

Rick Hilton, Paris Hilton’s father and a cryptocurrency buff, was also announced prominently as an adviser in its white paper.

Interestingly, its ICO was supposed to be two weeks after the Securities and Exchange Commission settled with two other ICO issuers, and since then there has been zero communications from the company and the ICO does not seem to have happened.

I couldn’t find any other blockchain projects being performed by Hilton, so it leaves me curious.

Did this individual simply read about this project and assume that because Hilton is behind it that it must confirm his views that blockchain has value, but cryptocurrencies do not?

This, purely because of his apparent admiration for the Hilton brand? Perhaps, perhaps not, although it is a common theme in this space. People seem to jump to believing what they want to, rather than digging into the details.

Months ago, The Economist proclaimed: “Bitcoin and other cryptocurrencies are useless — for blockchains, the jury is still out.”

The challenge, however, is that there is no clear agreement on what “blockchain” actually means.

There are some who would argue a blockchain without a cryptocurrency is really a distributed ledger, not a blockchain. There is a tremendous amount of confusion and oversimplification that leaves the term rather meaningless.

The challenge is like that of Mr Stoll, who was well versed in the technology, saw mostly what it was then rather than the change that it could bring.

It is really hard to predict and understand because it is changing at such a rapid pace.

I have studied blockchain and distributed ledger technologies for years and wouldn’t come close to claiming that I “understand” it.

The more I learn, the more I realise I simply don’t know.

I recognise that this technology is far more than a “glorified Excel spreadsheet”, as leading sceptics such as Nouriel Roubini claim.

As a result, I have evolved my views on the industry countless times as I continue to gain knowledge and, most importantly, try to keep an open mind to any possible outcome.

Understanding this technology requires a fundamental understanding of the building blocks of distributed systems, cryptography, politics and economics.

These fields are complex and broad, which makes understanding blockchain no easy feat.

Made worse is when the word itself is reduced to a meaningless catch-all phrase. It has become a massively overhyped buzzword in the same way “cyberspace” and the “World Wide Web” were in the days of Stoll’s article.

There is certainly a lot of hype that in the short term could be proven wrong, but in the long term could be proven right as the technology evolves. The challenge is that it is really hard to predict the future.

You can’t simply look at it as it is today and assume it won’t continue to evolve. Thus, it is hard to truly understand the implications of how these new technologies will affect the world over the long term.

Even worse, purported experts completely have the potential to be proven wrong over the long term, this writer included.

It’s easy to get caught up in the hype and misconceptions. Eventually, we’ll see how it all pans out and how the world really is changed by this new technology and the concepts being built around it.

In the meantime, I’m particularly glad that Mr Stoll was wrong about the opportunity to telecommute; the reason being that I’ve been thankful to work on and submit this edition of my column while travelling over the holidays and know that many who read it will do so over the World Wide Web of cyberspace.

Even if we don’t use any of those overhyped buzzwords to describe it any more.

Denis Pitcher is a software and technology solutions consultant with an interest in exploring the potential of blockchain and distributed-ledger technologies. He is also tech co-founder and chief architect of resQwest.com, a global tourism technology solutions provider. He can be reached at mail@denispitcher.com