Bitcoin’s price history has followed Gartner Inc.’s “Hype Cycle” model, a branded geographical presentation of a 5-step process by the well-respected computer research firm, noted Zafar Khan, CEO of RPost, a provider of electronic communications, in a recent blog.
This gives some legitimacy to the idea that bitcoin and blockchain are maturing and it might be a good time to consider investing in the technologies. The blog also goes into what Khan thinks is really new about blockchain — namely that it is an open source technology — something that is useful in some situations but not others. Some things hyped as new are not really new in his view.
Bitcoin’s hype cycle began in late 2013 when it became available to mainstream users. The price rose in a few months from a few dollars to a thousand, fueled by the hype that bitcoin could become a mainstream world currency.
When users realized there were limited ways to spend the cryptocurrency, the price crashed – almost perfectly following Gartner Inc.’s hype cycle.
Recent announcements by major banks that they are testing and investing in the technology indicate Gartner’s “slope to enlightenment” period has since taken shape.
The “slope to enlightenment” is defined as “more instances of how the technology can benefit the enterprise start to crystalize and become more widely understood. Second and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.”
One must assume there is some benefit to the technology that has driven typically conservative banks to announce they are conducting pilot financial transactions using it. Barclays Bank, for example, commissioned a white paper describing the technology’s potential while IBM’s CEO wrote an article in The Wall Street Journal about it.
Considering how bitcoin’s price history matches the Gartner Hype Cycle curve, now would be a good time to explore applications for blockchain technology, Khan noted. RPost is one company that has pioneered digital transaction technologies and is now also exploring blockchain applications.
Having developed secure messaging and authenticated digital transaction technology for more than a decade, RPost is exploring applications for blockchain technology which could revolutionize some aspects of financial services.
RPost is considering blockchain applications for its email technologies to enable digitized property records, smart contracts and “electronic” chattel paper.
What is new about blockchain technology is that it creates a transaction record that can extract the transaction content and transaction timestamp in an authentifiable form and store it on a ledger associated with identifiers of the transaction parties and transaction history.
The information is stored and updated simultaneously on thousands of computers and can be accessed by any party to review the record for transaction timestamp, parties or authenticity.
What is also new is that instead of having the parties to the transaction maintain private electronic records, the records are maintained in numerous copies and easily available for review by anyone.
Such transparency makes sense for regulated transfers such as real property transfers and commodity trades. But not for transactions requiring privacy.
The transparency also invites liability, which has already been demonstrated by events such as the recent $70 million heist of the Bitfinex exchange.
The anonymity benefits of blockchain are frequently oversold, according to Khan. All bitcoin transaction records are open and available for inspection using tools like Block Explorer.
At some point, bitcoin ownership could be connected to individuals. Individual transactions could be accessible to outside parties.
One blockchain technology drawing interest is “smart contracts,” a technology which Khan claims is not that revolutionary. The idea is similar to giving someone a way to bill a bank account directly without having to receive a bill, providing certain conditions are met.
Transferring money electronically using SWIFT or other money transfer networks is not new, Khan noted. Nor is recording the transaction terms electronically in a format that can be authenticated. Many transfer networks can cryptographically “digitally sign” a PDF transaction record for later authentication.
Digitally timestamping the transaction complete time is not new. Third party digital timestamping services exist.
Archiving the electronic transaction record is not new. There are lots of document archive services.
Recording the electronic correspondence conveying the offer and acceptance with timestamps and authentifiable records is not new. RPost’s RMail Registered Email provides a registered receipt transaction record serving as irrefutable proof.
Where there is hype around a re-packaging of crypto-technologies, there will be winners – those that find the right technologies to ally with, invest in and employ.
Khan recommended people continue to watch blockchain technologies, but recognize that those organizations that can benefit most are often the slowest to change.
Images from Shutterstock and RPost.
Last modified (UTC): October 16, 2019 07:12