Working with the Enemy: Why Blockchain Adoption is a Social Problem

After a year and a half of over-inflated expectations, it appears that we’ve reached the nadir of blockchain’s current hype cycle. Disillusionment has replaced optimism in many corners of the market, yet the underlying technology marches inexorably forward.

At its core a blockchain is a public ledger—a transparent, immutable, and decentralized database which contains an agreed upon truth. This truth could be any number of things, from who holds how many of which asset, when a document was created or edited, or where a coffee bean originated and who handled it through the global supply chain.

Achieving consensus on a truth, any truth, in the Internet age is a desperately needed innovation. The financial and social costs of digital misinformation, whether created through malice, error, or simple lack of coordination, are too large to measure. This hype is understandable, but progress takes time, especially for complex distributed systems.

However, baked into this potential lies one of blockchain’s central issues: the challenges purported to be solved are so vast that the requisite collaboration is significantly more challenging than the technology itself. To realize the full potential of what blockchains can do we’ll have to leave the comfort of our siloed environments, even if that means working directly with our closest rivals.

The Social Network

Some of the key advantages afforded by blockchains stem from their decentralized nature. Decentralized systems are more robust because by design they lack a central point of failure. If one piece of the system becomes compromised, the network simply flows around it.

The Internet, as originally designed by DARPA, was supposed to protect itself with this style of decentralization, but Google and Facebook have subverted that ideal and are now de-facto gatekeepers of the modern web. They wield enormous power (and reap equally large benefits) by selling access to the data that passes through their systems. Are blockchains the answer to this centralization of access and power? They could be, but the real answer we’re searching for isn’t technical in nature, it’s social.

Adoption is the ultimate measure of success for any technical innovation. The technophiles that waded into the murky world of early blockchain projects have gotten us to where we are today, but the next wave of users will be decidedly less technically savvy. The truth is they won’t really care how it works. They’ll care if it makes their lives better.

Speculators will have you believe that the sector is ready for mass adoption, but the user experience of most blockchain applications is far from user-friendly. The vast majority of users won’t want to think about key management or care about the consensus protocol working in the background. They’ll need onboarding that’s as simple or simpler than the status-quo combined with a tangible benefit. They may not even know that the new app everyone is talking about is powered by blockchain: they’ll just need to know that it works.

We’re getting closer to this ease of entry, but user adoption is only one half of the story. Perhaps even more challenging is coordination amongst large-scale innovators, because decentralization is diametrically opposed to the centralized organizations and corporations who are currently investing in the underlying infrastructure.

A Labyrinth of Walled Gardens

Applications of blockchain go well beyond digital currency. From supply chains to digital identities and power-grid management, the possibilities seem endless. However, if we wish to realize the full benefits of a decentralized public ledger in something as complicated as global supply chain management, for example, we’ll need to address the issue already happening in today’s rush to commercialize this new technology.

If every major shipping company, tech giant, logistics firm, and retailer implements their own blockchain solution, we’re no better off than where we started. What we end up with is a walled garden, where we still rely on centralized players and intermediaries to travel between the various enclosures.

Say that this process plays out over the next 10 years, and through competition and market forces one company’s solution proves superior and all other networks are abandoned. Now we’ve achieved our goal of uniting under one public record keeping system, and we can rest easy knowing that our spinach and corn syrup can be fully traced from seed to supermarket.

But what we’ve gained in transparency comes at a steep cost. Now a single company controls the infrastructure that everyone relies on to manage their supply chain. Although we’d benefit from a transparent and immutable record of account, access and information would be more centralized than ever.

What’s needed is a ubiquitous use case that innovators can get behind without the need for a central authority, and that users can take advantage of with minimal onboarding. We’re still a ways away from making this a reality, but the foundations are steadily being built. The main advantage of blockchain—trust guarantees in the absence of a trusted intermediary—is valuable enough in itself that ownership of the system isn’t necessary to ensure return on investment.

We’ve seen some large scale collaborations taking shape recently, but more is needed in order to take full advantage of this emerging technology. If we can reach consensus amongst ourselves as technologists, business owners, and users, then we might be ready to take advantage of everything that blockchain has to offer.

Lucas PenzeyMoog, Apprentice

Lucas PenzeyMoog is an apprentice at 8th Light in Chicago.

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