I got involved in blockchain back in 2013. At that time, while the word “blockchain” was on the radar, Bitcoin was the manifestation of blockchain that was being widely discussed. I’d prior seen mentions about Bitcoin through various technology focused avenues, but 2013 was the first time I sat down and actually read up on the details of the technology. From a computer science perspective my mind was blown.
I have a strong slant towards decentralized systems, so, years prior to Bitcoin launching, after spending a lot of my own time studying, I had decided that a decentralized currency online was not possible. I had convinced myself there was no way to make a digital asset that could not be duplicated. After coming to that conclusion, I mostly stopped thinking about it. The beauty of Bitcoin’s solution was that it solved a puzzle called The Byzantine Generals’ Problem. This breakthrough brought into existence what I had written off as impossible. What was fascinating about the solution was that it did not theoretically under all cases 100% solve the problem, but in practice it solved it “well enough”.
One of the smartest computer scientists I know, after studying Bitcoin said to me, “It’s a fascinating system and I would have never built it.” “Why?,” I asked. “It has too many flaws I would have assumed it wouldn’t work.” A big part of Bitcoin’s genius was the human ambition to take this solution, with its flaws, believe it was good enough, and actually build it.
2013 was one the first big surges for Bitcoin user base and with that came quite a bit of venture capital spending. That spending continued and grew through 2014. At that time, Bitcoin’s price had seen a meteoric rise. That chart looked a lot like your typical VC investor dream chart. Up and to the right.
In the midst of that excitement I founded a club called Bitcoin Developers Los Angeles. We met and discussed interesting blockchain technologies from “on-chain” asset exchange to proof-of-stake based blockchains. The scene was buzzing with excitement and the general feeling was that the growth would continue.
Since the chart was up and to the right, VCs had the metrics they needed to justify making bets on blockchain technology at that time. Companies were cropping up with all kinds of “on-chain” technical solutions. A significant percentage of these startups were in the same position — if blockchain technology was not rapidly adopted, their company would not be viable. This is an important distinction because there are cases where blockchain technology can improve existing systems as a simple addon, but there are other examples where blockchain is better only if a large population of people agree to switch over to this new system. This is the chicken egg problem of many blockchain companies.
As I said, in 2013 and largely 2014, all signs pointed to a large growth in adoption, so that chicken egg problem looked like it would solve itself. Towards the end of 2014 and into 2015 the price of bitcoin continued to drop and growth stagnated.
A chart of user growth on bitcoin reddit:
As all the metrics plummeted, a new reality for blockchain appeared. That reality could be likened to the first dotcom bubble in some ways. In the mania, fundamentals did not matter, but now the hangover was here. It became painfully clear, day after day, that cryptocurrency and blockchain were great innovations, however, this did not mean that everyone would see them that way and want to start using them immediately.
Any VC will tell you that an important part of your pitch is explaining your growth strategy. In 2014, for a lot of blockchain startups, the answer was simply “if we build it, they will come.” In 2017, we know blockchain is not a growth strategy, similarly to how coding your product in python versus php is not a growth strategy. In most cases, users don’t even know what a product tech stack looks like or even what that means! Blockchain is a technology stack strategy that brings great benefits, but the blockchain part is not what will bring the users. Therefore, blockchain is a “how”, but “WHAT” is the first question you need to answer for your idea. What are you trying to accomplish? (Hint: you should be able to explain this without mentioning blockchain)
I decided to write about this now because blockchain is again hitting a stride. I’ve done a number of articles and speaking engagements on the topic. People who contact Green Mango are showing interest in hiring us to build blockchain related technology. Blockchain can help your project in a number of ways. Some uses vary from immutable timestamped records, transferring money across the world, or exchanging assets with no middle man. It can even to reconcile accounting between two companies. There are many interesting things that can and will be done with it.
I do believe it will change the world, and here at Green Mango we love working on blockchain projects. Our approach will continue to embrace the technology while being constantly considerate of the unchanged required parameters for a successful software project. Those being: Great product and user experience agnostic to your technology stack, reliability, and a strong user acquisition plan.