Before we continue, many readers—and, perhaps, many stunned employees at the aforementioned companies—might be wondering: What the heck is a blockchain, anyway?
At the most basic level, it is a record of information stored on a network of computers. When people use a cryptocurrency like bitcoin to buy a pizza, a kilogram of illegal drugs, or a yacht, these digital transactions are approved by a network of computers around the world running bitcoin software. Each batch of these transactions—a “block”—gets a cryptographic code, a copy of which is posted to every computer in the network. These blocks are permanently linked to each other in a “chain” of publicly approved transactions that cannot be edited. Thus, blockchain.
You could say that blockchain is the ultimate “anti-trust” technology. That’s not only because it facilitates transactions between parties that don’t have to trust each other, but also because it doesn’t rely on a single source of power with total control of a market, like old-fashioned “trusts.” That means you could have a currency without a Federal Reserve (as with bitcoin) or run a software program without buying space on an Amazon server (as with Ethereum).
For the last six months, the biggest blockchain story in the world has been bitcoin, whose vertiginous price increase has captured global attention. Some analysts, myself included, have compared the bitcoin boom and the crypto frenzy to the dot-com bubble. In this analogy, bitcoin is akin to a single, fragile dot-com darling, while blockchain is akin to the internet, a potentially revolutionary technology that can survive the obliteration of any one cryptocurrency.
But while this analogy is popular, it has one critical weakness that doesn’t bode as well for crypto. When the dot-com bubble burst, starting in 2000, the internet was very much a mainstream phenomenon. About 50 percent of American households were online, and the number continued to grow even as the NASDAQ imploded. The internet was a technology with relatively obvious implications. At the time, Google was already ranking webpages in search results, Amazon was already a digital store that shipped boxes to front porches, and AOL had already figured out how to bundle news with personal communication, a decade before Facebook improved the recipe. The internet in 2000 had captured our attention; tens of millions of Americans were actually using it. Blockchain has merely captured our curiosity; tens of millions of Americans are merely reading about it.
Bitcoin might be where Pets.com was in 2000—a technological curiosity in search of an enduring business need. But blockchain is not where the internet was in 2000. Even blockchain’s biggest defenders can’t say what the technology’s most obvious consumer use-cases are going to be, because they plainly don’t exist yet. It is possible they never will.