Wall Street rethinks blockchain projects as euphoria meets reality

That said, on the flip side, a lot of people have been considering Blockchain as some kind of magic solution to all of the world’s problems, and that is also very far from reality. If it takes an article in Reuters for people to realize this than so be it.

I have believed for a while that Blockchain technology in the context that many big companies refer to it is not very useful. Usually these are the same people who claim that Bitcoin is useless and Blockchain technology is where the real value is. I think they are either mistaken or misinformed.

In my opinion, anyone who plans to build a centrally controlled Blockchain is making a mistake. Even if the data is signed/hashed and distributed, it only takes one bad actor inside the organization who has access to the nodes to alter the Blockchain by performing a 51% attack (changing the transaction data on more than half of the nodes). Therefore the entire idea of a Blockchain being immutable is thrown out the window. You would be much better off using an open source database like MySQL or Postgres or Mongo. Blockchains are expensive to run and operate and are extremely slow.

However, the idea that Blockchains are a solution in search of a problem that the article suggests is also a bit misleading. I think it’s more likely that these companies are trying to find solutions for things that aren’t problems in the first place which isn’t the fault of Blockchain technology itself. I feel pretty strongly that blockchains have already solved a few problems.

- They solve the double spending problem (the idea that the same tokens can be spent more than once)

- They allow people to store value without depending on any third party (such as a bank)

- They remove all the intermediaries required for sending payments/data from one person to another.

- They make it cheaper and faster to send any amount of money to anyone in the world

To me, those are all transformative properties of blockchains, and anyone who overlooks them is somewhat missing the point. That said, in order to check off all these bullet points, you need to have a peer to peer, decentralized network where peers are rewarded with crypto currencies for securing the network, not just a few servers running inside of a company as a replacement for a centralized database.

Will there be good Blockchain applications outside of crypto currencies? I’m not sure, but to me, there is nothing wrong with that. If, in the future, banks and cash become obsolete and everyone stores their money on their own secure, digital wallets, then I would say that Blockchain technology changed the world for the better.

Bitcoin cash is trying an other route with bigger blocks but it remains to be seen if it scales well enough to real-world currency usage. And of course there's the big problem of cryptocurrencies being useless as currencies because they're not stable enough. Which itself can be largely blamed on their limited supply and inflationary nature which is necessary to bootstrap them (there's an incentive to get in early) but seems to turn against them in the long run since nobody wants to spend something that's by design supposed to become scarcer and scarcer.

It might be theoretically free but it doesn't work great so far. And of course we could discuss whether a completely free market is a good or a bad thing, but that's a whole different debate.