原文通讀
Prospects
Beyond the hype
Cryptocurrencies look like a solution in search of a problem. Blockchains could be more interesting
A FAVOURITE comparison drawn by cryptocurrency and blockchain enthusiasts is with the early world wide web. These technologies are only a decade old, they say. Trying to predict how they might change the world in the future is next to impossible. Who could have known in 1998 that there would be such a thing as Facebook?
The comparison is carefully chosen. The web has been remarkable for the speed with which it has conquered the world. The first web page appeared on the internet in 1991. A decade later Amazon was booking revenues of $3.1bn a year; America Online, an early internet-service provider, had more than 20m customers; and half of Americans had internet access.
By that yardstick, cryptocurrencies have made very modest progress. But then it is highly unusual for a technology to fare as well as the web has done. A rule of thumb for venture capitalists is that nine out of ten projects they back will fail. Not every new thing is the next big thing.
Better, then, to evaluate cryptocurrencies and blockchains on their own merits. Start with cryptocurrencies. It is clear that, a decade after they were invented, their use for their ostensible purpose—as a means of exchange—is negligible. A lot of work is being done to fit them better for this task, so that could change. But if their use is to become widespread, they will have to offer something that existing currencies do not. Bitcoin’s original selling-point—freedom from any kind of central control—holds little appeal for ordinary people, says Gary Barnett of GlobalData. Most of them just want a payment system that is safe and easy to use. And given cryptocurrencies』 shortcomings—the lack of consumer protection, dizzying price fluctuations, fiddly software, slow throughput and a voracious appetite for electricity—at the moment they fail that test.
One thing that might help, despite bitcoin’s anti-establishment roots, is more attention from regulators, to combat the epidemic of fraud and sharp practice in the field. Some cryptocurrency firms are focused on exactly that. Chainalysis, for instance, hopes to help firms analyse their clients』 cryptocurrency trading to comply with anti-money-laundering rules.
Some think a more radical approach is needed. Despite the absence of a centralised operator, says Angela Walch, a lawyer and member of the Centre for Blockchain Technologies at University College London, the coders whose efforts establish the system in the first place and the miners who maintain a cryptocurrency’s ledgers do hold power. So she thinks there is a case to be made for treating both coders and miners as fiduciaries, imposing a legal requirement on them to act in the interests of the system’s users.
Going round in circles
Even a well-regulated cryptocurrency, though, would be subject to the 「network effects」 that have led to an oligopoly in social media. New users tend to choose the biggest firms because everyone else is already subscribing to them. In the same way, a currency’s utility depends on other people using it. 「In order for merchants to start accepting cryptocurrencies, there needs to be demand [from customers],」 says Kim Baeur at Chainalysis. 「But in order for customers to want to use it, they have to expect to be able to spend it.」 Cryptocurrencies would have to offer a compelling advantage over other payment mechanisms to break that logjam. But since speculators love them, they are not likely to disappear either.
Blockchains could be a different matter. Like cryptocurrencies, they have been oversold. Because of its decentralised nature, a blockchain will always be slower and more cumbersome than a standard database. But blockchain developers are trying to minimise those problems by doing away with features such as proof of work, which is necessary in a public system open to anyone but superfluous in a system designed for private use. As with cryptocurrencies, a sensible attitude to regulation helps. The most credible actors cite their compliance with regulations around finance, personal data and the like as a selling-point.
For now, however, almost all blockchain projects remain experimental. Most will fizzle out. The less world-changing a proposed use, the better its chance of success. For example, the cryptographic structures that make data in a blockchain hard to change are fairly easy to introduce. When they add an extra layer of security to things like financial accounts or official documents, they could be useful.
A bigger prize awaits in the back office, reducing the time-consuming administration required for firms to talk to each other by providing a shared database which everyone can use. This may be easiest where existing systems are minimal and there is no incumbent centralised regulator. Two examples commonly cited are trade finance and international money flows.
Other compelling uses may yet emerge. But it is worth bearing in mind that big IT projects—which is what blockchains amount to—tend to be cumbersome and slow even if they are undertaken by a single company. If they require several companies to work together, they will take even longer. So whatever happens, blockchain’s backers will need patience.