The cryptocurrency industry moves at such a fast pace that it can be difficult to see the big picture–dramatic price movements, big personalities, regulatory moves, and instances of fraud can easily cause a rather myopic perspective.
But as the industry and the technology that powers it continues to evolve, it’s more important than ever to take the long view. Blockchain industry insiders must remain aware of the threats and opportunities that are headed for the industry, and as such, must hold onto the ability to make long-term decisions as tightly as possible.
Michael Bancroft, host of Beyond Innovation on Bloomberg TV, recently spoke with Finance Magnates about his perspective on cryptocurrency and blockchain technology from his bird’s eye view at the top of the tech world.
Blockchain Will Spread Throughout Various Industries
“[There are] so many different places that I think we’re going to see blockchain technology be used,” Bancroft said, adding that the underlying blockchain technology-based platforms that are being developed by a number of different companies are more valuable than the cryptocurrencies they may support.
— Michael Bancroft (@MBancroft80) March 3, 2019
He went onto say that some of the most prolific examples of potential use cases for blockchain are being pursued by big players in the financial and healthcare industries. “We’re also seeing potential changes even in places like the media,” he said. “There are interesting developments I’ve seen with media content, such as TV and film productions that [will be] funded and distributed in the not-too-distant future by blockchain.”
“I think we’re going to see it being used to organize and track funds that have been raised for film production, and [for] the payment of royalties,” he said.
As it stands now, “these things are very difficult, and these arrangements are often very complex and multifaceted, and could use more transparency,” Bancroft said. “So I see blockchain technology and the application of blockchain being used in places that we haven’t really seen before.”
Interoperability is Coming in 2019
“One of the key trends I think we’re going to see unfold (especially for 2019) is the increasing standardization and interoperability of blockchain networks.”
Interoperability means a lot of different things.
At a high level, it really means decoupling application from the underlying compute environment. In blockchain assets are the application so asset portability is a key layer for general interoperability
— Zaki Manian (@zmanian) August 10, 2018
“In the short term, we’re going to [continue] to see individual blockchains,” Bancroft went on. “It’s similar to what we’ve seen with smartphone operating systems–so a handful of blockchain ‘operating systems’ will emerge that will make seamless and secure data storage and distribution possible in a large scale, and different blockchains will need to understand how [the others] codify and store data.”
“That’s why this interoperability to the technology’s ‘massive’ adoption,” Bancroft explained.
”Survival of the Fittest”
However, before interoperability will truly be a possibility, the world will have to wait to see which projects will take root in a longer-term sense. “Basically, it’s survival of the fittest,” he said. “[We’re also seeing this] in the crypto mining industry right now–only those with large mining operations and very low electricity costs will make it out alive.”
“That has soured the sentiment in the industry” in a broader sense, he said. “So it’s a lot more difficult for companies to raise capital–and [indeed], it’s going to be those companies that have a large amount of capital and have built-in high profit margins that can weather the storm.”
The companies that have enough capital on hand to make it through the hard times that the industry is facing at the moment. “If they’re able to weather the storm, they’re able to do further research to develop the technologies, and then hopefully succeed on the other end.”
“But it is going to be very difficult given the current state of the market and the sentiment toward crypto mining and cryptocurrencies,” he explained, adding that the situation is particularly acute for crypto miners.
“Many smaller crypto miners were only profitable when [cryptocurrency] prices were much higher, and don’t have the capital to, as I said, weather the storm. Some of them may be able to switch off their rigs and wait for the market to turn, but many will be turning their [machines] off for good, and that’s the scary part.”
“The bigger players will manage because their margins are robust and they can manage to take a near-term hit, so they’re the ones that are going to last.”
People Still Don’t Know the Difference Between Blockchain and Crypto
Another issue that Bancroft pointed out is that quite a bit of confusion around blockchain and cryptocurrencies remains in the general public.
“A lot of the general population don’t fully understand the difference–they think that blockchain is crypto, as opposed to the technology or the function…and so they’re lumping it all in together,” he explained.
“I think that that’s one of the biggest challenges as well for the people trying to pioneer this space.”
Blockchain May Not Always Be “Unhackable”
However, people may soon become more familiar with blockchain as it is increasingly used in cybersecurity. In the current moment, “cybersecurity is a huge concern. We have massive amounts of data,” Bancroft said. “It is something to be concerned about.”
Bancroft said that before too long, “what we’re likely to see is blockchain being employed for cybersecurity… [in] governments who are looking to secure important files and records safe from hackers.”
Governments have also been experimenting with using blockchain technology as a way “to secure voting records and to ensure transparency and legitimacy in the democratic process.”
— Dubai Media Office (@DXBMediaOffice) October 5, 2016
“But that also gives me a little bit of concern because people believe…that blockchain is the ‘be all and end all’, that it’s super safe and secure, and I don’t think that’s fully accurate.”
“I don’t think it’s unhackable,” he said. In theory, the cryptography that’s used to secure blockchain networks would take today’s computers thousands of years to hack. “But, for example, if quantum computing is able to scale up,” and become cheaper and more widely adopted, “in theory, what took an average, normal computer [thousands of years] could take a quantum computer under a minute.”
If #quantum computers threaten #blockchain, #quantumblockchains could be the defense. Quantum computers could break the #cryptography that conventional #blockchains rely on https://t.co/3aFEhBOJsX pic.twitter.com/PHXWYSULlV
— Bill Mew (@BillMew) May 2, 2018
“We can’t be ignorant to technological developments” that might threaten the security of blockchain networks, Bancroft explained.
This was an excerpt. To hear the rest of Finance Magnates’ fascinating interview with Michael Bancroft, click the Soundcloud or Youtube links.