Blockchain will change everything — or so many analysts thought. The hype over distributed ledger may have hit its apex, and we’re already seeing evidence of its decline.
The R3 consortium, which secured the support of dozens of major financial institutions around the globe as it promoted blockchain-based innovation, recently saw its membership levels decline thanks to Goldman Sachs leaving the group. R3 also raised $59 million from its investors — far, far short of the initial $200 million it had hoped to raise.
That hardly means blockchain technology is a flop, however. In fact, Chris Finan, cofounder of blockchain startup Manifold Technology — which has worked with some of the banks in the R3 consortium — believes that, as the hype fades, distributed ledger can reveal its true potential.
“When the sheen starts to fade away on some of the unrealized promise of the technology — that it was going to be a panacea for capital markets and help institutions completely offload risks — I think people are starting to say, ‘OK, let’s think more practically about this.'”
There are actual ways that blockchain can overhaul business processes, and Finan said his confidence is in the technology’s ability to impact the internal processes of the enterprise. Sure, it’s not the most exciting potential use case, but Finan told PYMNTS that it can bring corporations real benefits and not just a hypothetical proof-of-concept.
“Sometimes, people have looked at our positioning and said, ‘Oh, that’s boring. You guys are focused on these enterprise inefficiencies and security channels,'” he admitted. “But I think as we’ve now crested the peak of the hype cycle and we’re headed towards the troth of the hype cycle, people are recognizing that reducing IT operational costs, improving security through greater data integrity, this may sound like boring blocking-and-tackling, but there are real enterprise benefits to this.”
Finan said he views the potential of distributed ledger in internal areas like payments, global cash management, internal settlements and other asset management processes for businesses. For corporate CIO and IT teams, reducing operational costs, risks and other points of friction within infrastructure can be incredibly impactful.
One of the biggest challenges of this is proving that these use cases not only work but can integrate into existing workflows and meet security standards, Finan added. Doing so can build greater confidence in blockchain overall.
Today, building confidence is beginning to look like an uphill battle. With the hype plateauing out, there are many doubters of blockchain’s ability to truly take off.
“I’m hoping there is a silver lining in that sheen fading,” Finan said. “From a macro-perspective, it is worrying because I think there may be less capital for startups like us.”
Indeed, he added that he is certainly seeing headwinds. But the silver lining in the industry excitement fading over blockchain means that there is more clarity about how (and where) the technology can gain traction.
Manifold’s faith in blockchain recently took shape in the form of the Manifold Platform last month. It’s an open-source platform for developers to tinker around with Manifold’s distributed ledger tools and develop whatever solutions they’d like, meaning Manifold can focus on developing its own applications with blockchain but still have a hand in solutions designed by other innovators as well.
“If you really want to accelerate innovation, the more open you can be, that not only helps everybody but also drives the acceleration of innovation,” Finan explained. “We believe, from a business perspective, that the market hasn’t really decided what it wants yet in terms of specific applications.”
“There’s no possible way we, as a startup, can go chase every potential application of this technology,” he continued. “We wanted to leverage the crowd and contribute something so that not only can developers ideally be active and do something with our platform we never thought possible, but hopefully, we’re empowering and enabling them to solve problems.”
It’s yet another way Finan seems to be taking a more practical approach to blockchain. No one company is going to be able to crack the code as to how blockchain can make an impact, so Manifold might as well open up its technology to the developing world so everybody can take a stab at it.
“There are still a lot of interesting problems to be solved,” the executive said, “and we haven’t seen the perfect application of blockchain yet.”