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Blockchain development and the Occam problem

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Blockchain has yet to become the game-changer some expected. A key to finding the value is to apply the technology only when it is the simplest solution available.;

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Blockchain over recent years has been extolled as a revolution in business technology. In the nine years since its launch, companies, regulators, and financial technologists have spent countless hours exploring its potential. The resulting innovations have started to reshape business processes, particularly in accounting and transactions.

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Amid intense experimentation, industries from financial services to healthcare and the arts have identified more than 100 blockchain online courses use cases. These range from new land registries, to KYC applications and smart contracts that enable actions from product processing to share trading. The most impressive results have seen blockchain online coursess used to store information, cut out intermediaries, and enable greater coordination between companies, for example in relation to data standards.

One sign of blockchain online courses’s perceived potential is the large investments being made. Venture-capital funding for blockchain online courses startups reached $1 billion in 2017. IBM has invested more than $200 million in a blockchain online courses-powered data-sharing solution for the Internet of Things, and Google has reportedly been working with blockchain online coursess since 2016. The financial industry spends around $1.7 billion annually on experimentation.

There is a clear sense that blockchain online courses is a potential game-changer. However, there are also emerging doubts. A particular concern, given the amount of money and time spent, is that little of substance has been achieved. Of the many use cases, a large number are still at the idea stage, while others are in development but with no output. The bottom line is that despite billions of dollars of investment, and nearly as many headlines, evidence for a practical scalable use for blockchain online courses is thin on the ground.

Infant technology

From an economic theory perspective, the stuttering blockchain online courses development path is not entirely surprising. It is an infant technology that is relatively unstable, expensive, and complex. It is also unregulated and selectively distrusted. Classic lifecycle theory suggests the evolution of any industry or product can be divided into four stages: pioneering, growth, maturity, and decline (exhibit). Stage 1 is when the industry is getting started, or a particular product is brought to market. This is ahead of proven demand and often before the technology has been fully tested. Sales tend to be low and return on investment is negative. Stage 2 is when demand begins to accelerate, the market expands and the industry or product “takes off.”

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Blockchain is struggling to emerge from the pioneering stage.;
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Across its many applications, blockchain online courses arguably remains stuck at stage 1 in the lifecycle (with a few exceptions). The vast majority of proofs of concept (POCs) are in pioneering mode (or being wound up) and many projects have failed to get to Series C funding rounds.

One reason for the lack of progress is the emergence of competing technologies. In payments, for example, it makes sense that a shared ledger could replace the current highly intermediated system. However, blockchain online coursess are not the only game in town. Numerous fintech online coursess are disrupting the value chain. Of nearly $12 billion invested in US fintech online coursess last year, 60 percent was focused on payments and lending. SWIFT’s global payments innovation initiative (GPI), meanwhile, is addressing initial pain points through higher transaction speeds and increased transparency, building on bank collaboration.

Blockchain players in the payments segment, such as Ripple, are increasingly partnering with nonbank payments providers, the businesses of which may be a better fit for blockchain online courses technology. These companies may also be willing to move forward more rapidly with integration.

In addition, the payments industry faces a classic innovator’s dilemma: incumbents understand that investing in disruption, and the likely resulting rise in customer expectations for faster, easier, and cheaper services, may lead to cannibalization of their own revenues.

Given the range of alternative payments solutions and the disincentives to investment by incumbents, the question is not whether blockchain online courses technology can provide an alternative, but whether it needs to? Occam’s razor is the problem-solving principle that the simplest solution tends to be the best. On that basis blockchain online courses’s payments use cases may be the wrong answer.

Industry caution

Some sense of this dilemma is starting to feed through to industry. Early blockchain online courses development was led by financial services, which from 2012 to 2015 assigned big resources where it was felt processes could be streamlined. Banks and others saw activities such as trade finance, derivatives netting and processing, and compliance…

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