The cryptocurrency industry has seen it’s fair share of market cycles over the past few years. The latest? A massive spike from $1000 to $21,000 and back down to the current price of around $3,700.
It’s a huge bubble that generated a ton of media coverage, gained a lot of attention and unfortunately created a wave of challenges for the underlying technology – blockchain.
While developments in the technology have been steadily improving the constant focus on cryptocurrency price has created a poor branding image for blockchain as a whole.
In our latest Innovators, CEOs and Founders in Blockchain report we sat down with +15 CEOs to find out what they believed was holding the blockchain industry back. This article will focus on the next immediate hurdles, but the 25+ page report can be downloaded for free.
Here’s what executives from Deloitte, Bitfury, Icon Foundation and more had to say.
1) Understanding Setback
It’s been said that you have to understand where you are to get where you want to go. Without knowing where you are – you don’t know what direction to head.
While the responses varied, the misconception that blockchain is cryptocurrency was by far the most common challenge executives mentioned was holding the industry back.
As Marc Taverner and executive with the billion-dollar valued Bitfury mentioned “One of the biggest stereotypes goes like this: Young white male, sitting in bedroom, with computer, gets mega-rich using Bitcoin, or mining Bitcoin.”
And while this has happened, and there are stories of this happening, it’s not the norm in the cryptocurrency market, and it is not what blockchain technology is all about.
As a quick reminder, cryptocurrency is an application that runs with blockchain technology. It is not blockchain technology itself.
Understanding what cryptocurrency is all about, and clarifying the stereotypes is one of the first steps to overcoming the misconceptions about blockchain technology. This is where the industry is at today.
Yes, the media will continue to talk about bitcoin price, cryptocurrency market swings and the odd millionaire or billionaire who’s making or spending their money.
But understanding the core concepts of blockchain technology is the first major hurdle to overcome.
“There’s a dangerous lens that causes people to look at ‘crypto’ and say “none of this stuff is working now” – which is very true. But then dismiss it because nothing is working in the short term. And miss the forest for the trees.” says Devin Finzer, CEO and Founder of OpenSea.
Education about blockchain as a technology, about the developments in the industry and about what it can and cannot be used for will help drive adoption.
3) Who Wants to Be The Next Success Story
Many of the executives we interviewed said that blockchain would rapidly advance once there was another mass-adoption success story.
Think of Bitcoin as the first. With an estimated 6-million active users, +20-million wallets, and with exchanges like Coinbase having +13-million users, it’s safe to say that bitcoin has achieved mass adoption.
And while this is productive for cryptocurrency, what is the next industry or area that will have a productive use case for blockchain technology?
It might be shipping and logistics, the medical industry, or even government identity. Having another significant, tangible use case will help drive the market forward.
4) Government Regulation
This has been a very hot topic over the past 18-months. With cryptocurrency causing massive waves over the past year, governments – most notably financial regulators like the SEC – have taken notice.
This has sparked a wave of discussion, from USA and Canada, to Europe, China, Korea and Japan – about what and how to regulate cryptocurrency. This has inevitably led to discussion about blockchain technology and the implications of privacy, data collection, ownership rights and more.
While outcomes are still largely unknown for the industry as a whole, there is headway being made on the cryptocurrency layer. Governments like Mauritius’ Financial Services Commission (FSC) or Malta’s parliament have pushed forward to create digital asset friendly regulations.
The CEO’s we interviewed believe that standardization in regulation is going to be a critical hurdle to overcome in the next 12-24 months.
Following the first four hurdles comes scalability, a challenge sparked by the previous problems.
Scalability requires improvements in underlying blockchain technology that will help pave the way for overall success.
As Michael Gord from MLG Blockchain comments “Adoption comes with numbers and users. This is part of network effects. Probably all of the social media companies right now have blockchain departments. As soon as they (Kik or Telegram, with 100’s of millions of users each) release a token, overnight we’ll see 4x, 5x or 6x the number of users.”
This type of scalability cannot come without improvements in technology. Security. Transaction speed.
And it’s exactly why many executives believe a large player just might help push innovation forward.
The Way Ahead
Blockchain technology is still in its early days. There are a lot of challenges to overcome to make as ubiquitous as database technology, cell phones or the internet. But we’re getting there.
Overcoming the above hurdles will help move the industry forward, and every executive we talked to is moving their area forward, one step at a time.