We have occasionally discussed blockchain technology in this column over the past two years, with the most recent discussion being published in January this year.
What is surprising is that the more we talk about blockchain and cryptocurrencies (cryptos), the more confusion it brings to the debate. I have identified three groups of people or positions that arise whenever this discussion crops up.
The first group is the evangelists. This group imagines that blockchain and cryptos are the solution to every problem in the world. They spread and force the gospel of blockchain and cryptos to everyone, including those not bothered to listen.
The evangelists are often countered by the second group, the sceptics. The blockchain sceptics believe the technology and its first-use case, cryptocurrencies, are a big hoax that will soon blow up in smoke like all other Ponzi schemes.
In between these two groups, we have the pragmatics. Pragmatics are curious and take time to learn what the technology is all about, its benefits and risks. They then make a deliberate and informed decision on what to do next.
THE DON'T CARE GROUP
We could of course add another group of stakeholders – the don’t-care group. This group is least bothered as to what happens or doesn’t happen with blockchain or any other emerging technologies.
Within the evangelist group, you will find two sub-groups, the financial investors and the academics.
The academics love the science behind the blockchain phenomena and continue to explore and advocate its adoption, particularly in the area of streamlining organisational processes.
The financial investors, on the other hand, focus on spreading the adoption of cryptos for the simple reason that the wider the adoption, the higher the return on their invested cryptocurrencies.
This obsession with buying, storing and subsequently selling cryptos is what makes the sceptics feel that the whole blockchain ecosystem is based on defrauding the public - along the classic lines of Ponzi schemes.
CENTRES OF SHARED RESPONSIBILITY
The truth actually lies in between. There indeed exists Ponzi-like scams within the blockchain/crypto ecosystem. Many have been conned, and many more are likely to be conned in future. But this does not mean that the whole ecosystem is rotten.
If you took the email system as an example, you will realise that email has been used to con a lot of users through the infamous Advanced Fee Scams. Does that mean that email is bad and should subsequently be banned by authorities?
The better solution would be to educate the users and equip them with skills to spot and tell which of the myriad blockchain and crypto projects are scams and which one are authentic.
In any blockchain or crypto project, there will always be three centres of distributed and shared responsibility that need to be evaluated in order to arrive at the decision of whether its is a scam or not.
The first centre of responsibility belongs to the community of software developers maintaining the core software. One should ask if this community of developers is incentivised and large enough for the long haul.
In other words, what are the chances that they will be maintaining the software five, ten years from now?
The second centre of responsibility belongs to the community of miners who validate the transactions that end up into the blockchain database. The question here is to establish the incentives – if any – that will guarantee a continuous and available pool of computing power to validate transactions going into the future.
Finally, the third and equally powerful centre of responsibility belongs to the community of users. Users vote with their feet. If the software developers and miners collude to fraudulently sustain a particular cryptocurrency, the user community will simply cash out and move to the next crypto initiative.
From an assessment point of view, any proposed crypto project must therefore demonstrate sustainable value for the targeted group of users. If one did some deeper analysis of many of the blockchain/crypto start-ups, one may not find a sustainable value proposition.
This is where the pragmatic group comes in, evaluating each and every blockchain/crypto proposition on merit rather than dismissing the technology outright as a passing Ponzi-scheme.
Can we raise and have more pragmatics joining the blockchain revolution?
Mr Walubengo is a lecturer at Multimedia University of Kenya, Faculty of Computing and IT. Email: [email protected], Twitter: @Jwalu