I was asked this morning if I thought that there was too much hype around the blockchain.
The question, as phrased, is much more complex than it seems. A simple “Yes” or “No” would be completely misleading.
Is there hype? Yes.
Is there too much? No.
And by “no”, I don’t mean that the hype is at just the right amount. By definition, the word “hype” implies “too much”. In other words, I’m not sure that “hype” can be effectively quantified. It’s like saying “I’m a little bit pregnant”. (I’m not, if you were wondering!). You either have hype, or you don’t. From Wikipedia:
“Hype (derived from hyperbole) is promotion, especially promotion consisting of exaggerated claim.”
According to Google Dictionary, hype (verb) means
“To promote or publicize (a product or idea) intensively, often exaggerating its benefits”.
Both definitions, and most of the other ones I found, stress the exaggeration part, without claiming that all hype is inflated. But the implication is there.
So, we don’t have too much hype. However, I am convinced that blockchain technology is not the revolutionary change that the media and even industry experts seem to think. It is a revolutionary change, for sure. And the creative uses emerging across sectors are very, very interesting. But the potential uses are more limited than we are led to believe. And the hurdles in the way of its widespread adoption are much higher.
I’ll happily go into those limitations in more detail in a later post (lots to talk about there). Today I want to explain why I think that the hype, although potentially misplaced, is a good thing. Why we don’t have “too much”.
It’s all about marketing.
Virtually all hyped campaigns promise more than they can deliver. And technological innovation is especially guilty of that. Remember the promise of the paperless office?
To put this into perspective, I thoroughly recommend the paper by Gartner (2011) on hype cycles. You’ll have no difficulty recognizing where the blockchain is. Mass media hype begins? Check. Supplier proliferation? Check. Activity beyond early adopters? Almost.
The report goes into much more detail, giving a list of signs that a technology is at the peak (italics = my comments):
- The trade and business press run frequent stories about the innovation and how early adopters are using it. It’s not exactly correlated, but here’s the number of times “blockchain” has been searched for in Google Trends:
- A popular name catches on in place of the original, more-academic or specialist engineering terminology; for example, the wireless networking technology called 802.11g became “Wi-Fi.” “Blockchain” is pretty catchy.
- Analysts, bloggers and the press speculate about the future impact and transformational power of the innovation. Yup, including me. Some headlines just from the past few hours: Why the Bitcoin Blockchain Is the Biggest Thing Since the Internet (Nasdaq), Money keeps pouring into blockchain startups (Quartz), Blockchain Technology Could Help Solve $75 Billion Counterfeit Drug Problem (International Business Tiimes), World’s First Peer-to-Peer Energy Transaction on the Blockchain Has Arrived (Epoch Times), Beyond cryptocurrency: how blockchain can transform business (Silicon Republic)
- Simple, highly exaggerated, nonspecific declarative marketing slogans appear, such as “I have cloud power” and “cloud is the answer.” Uh huh. My favourite so far is “The possibilities for universal disintermediation across all verticals enables [sic] unfathomable, unforeseen opportunities.” I actually find myself saying similar stuff at parties. I don’t get invited to a lot of parties anymore.
- A surge of suppliers (often 30 or more) offer variations on the innovation. We’re way beyond 30. My preliminary list is up at around 50.
- Suppliers with products in related markets align their positioning and their marketing with the theme of the innovation. Yes, that’s happened. Non-blockchain technology providers are either pivoting or adding the service.
- Suppliers can provide one or two references of early adopters. Many early adopters go on to set up their own suppliers.
- Investors aggressively hunt down a representative supplier for their portfolio. Some early-stage venture capitalists may sell at this point. See the link to “Money keeps pouring into blockchain startups” mentioned above.
- Toward the end of the peak, one or two early leading suppliers are bought by established companies in expensive, high-profile acquisitions. There has been a ton of M&A activity in the sector. More to come, I imagine. And a list to follow.
So, there is no question that the blockchain world is swimming in hype. Here’s why I don’t think that that’s a bad thing:
One, it’s part of the natural cycle of evolution. Blockchain, as a new technology that has real potential, needs to go through the Gartner cycle. It hasn’t become an industry standard for nothing. The sooner we get through it, the sooner we can put the resulting “trough of disillusionment” behind us and get on with the real work of implementing the efficiencies across sectors.
Two, it’s all about marketing. To get enough industry players interested (and by that I mean all industries), the blockchain needs some powerful marketing. Change is difficult even when it’s obviously needed. The blockchain revolution is not obviously needed. We’ve been getting things done, sending payments, transferring assets and verifying documents just fine for years. When it’s not obviously needed, the resistance to change is very high. In fact, it can probably only be overcome by unrealistic hype. More accurate marketing, along the lines of “this is a new way of structuring distribution that will probably improve efficiency but we don’t really know what the cost or the unintended consequences are going to be and by the way it’s really complicated”, won’t attract the same kind of eager attention that the blockchain needs. The blockchain needs that eager attention because it needs industries in which to test itself. It needs experimentation, exploration and investigation, and without the hype, willing participants will be more difficult to come by.
Now, I’m not advocating reckless exploration. I’m advocating carefully trying things out. R3CEV’s approach to carrying out tests with a consortium of banks seems like a sensible approach, and one that I’m sure (= hoping) many other blockchain service providers will emulate. Would it have managed to convince so many big names to join the experiment if the hype were not at almost peak level? Probably not. But the fact that it did pushes the boundaries of what we know about the possibilities into the realm of practicality, and brings forward eventual implementation. That’s very exciting.
So, yes, there’s hype. And, yes, quite a lot of it is misleading. But it’s a necessary phase for a strong contender for “revolutionary technology of the decade” (no hype there). Without it, we wouldn’t be as far along as we are. And we wouldn’t have the momentum to take us through the next phases and eventually reach practical implementation and successful innovation.
According to the Urban Dictionary, the word “hype” can also mean a lot of other things: a type of drug user, a sarcastic reaction to something that’s not that exciting, and something that’s really cool, fun and noisy. I’m going to go with the last one. Blockchain technology, with all its limitations and upcoming disappointments, is totally hype.