You know a technology has officially jumped the shark when iced tea companies decide they want in on the action. In case you missed that one, Long Island Iced Tea announced it was changing its name to Long Blockchain Corp. back in December. Its stock jumped 200 percent at the start of trading the following day. That’s brisk, baby!
The least disturbing part of the story is that the name Long Blockchain Corp. makes no sense. Far more disturbing is that the company made the change even though they were, by their own account, in the early stages of evaluating and discussing potential partnerships in blockchain.
This story, to me, shows just how infatuated the technology space is with blockchain—a technology that, despite the hype, an overwhelming majority of companies doing business today have no true use for. As a Chief Technology Officer, I’ve seen more than enough fads and infatuations (Google Glass, anyone?) come and go. Unless you’re working with a very specific use case, I’d recommend sitting on the sidelines for this particular craze.
Don’t just take my word for it. Plenty of others are coming to similar conclusions. Nouriel Roubini had a similar take in an article he co-authored earlier this year, The Blockchain Pipe Dream. Recent research from GlobalData found that databases or other traditional technologies could be used instead of blockchain in 19 out of 20 cases where blockchain use is being touted.
If the articles above aren’t enough to scare off your blockchain-obsessed bosses or co-workers, here are 4 more compelling reasons to avoid using the technology, contrary to popular conventional wisdom about it being the technology to end all technologies.
Blockchain has been hailed as the technology that’s going to fundamentally revolutionize security in the digital space. I hate to be the one to break it to you…there’s no such thing as a “secure” technology. Encrypted means just that – encrypted. It doesn’t mean secure. That may sound like splitting hairs. It’s not. There’s a big difference. Any encryption has the potential to be broken. Doing so is simply a matter of time, desire, and compute power. Think of it this way: all encryption is a big, big math problem. Someone with sufficient time and/or compute power will be able to crack it eventually.
Another huge flaw in the “Blockchain will solve any/all security issues” logic is that the most commonly exploited security vulnerabilities are not technology-related. They’re related to humans being fallible, or even gullible. Humans who unwittingly give up their email passwords (see John Podesta, and Fazio Mechanical, or in the case of the RSA hack, a phishing attack was used to access information on their two-factor authentication product). By no means am I advocating not securing your customers’ data or information. What I am saying is that security is not technology alone, it requires education as well. It doesn’t matter that a blockchain is encrypted when it’s far easier to trick someone into giving up the payload.
I think the problem most people run into is that they’re thinking of blockchain as the business model. Instead of coming up with a business model and asking what technologies need to be used to support it, they’re starting with, “I’ve got an idea for how to use blockchain!”
To me, that’s the equivalent of looking at a hammer and saying, “This is a useful tool. I can do a lot with this hammer. I’m going to go into business hammering things.” There’s a reason why you don’t find too many professional hammerers…Architects, yes. Carpenters and construction workers, of course. “Professional hammerers?” Not so much.
Depending on what you’re building or what you’ve already built, what I think most people need when they talk about blockchain is simply a database. If blockchain isn’t right for you, what database would be? It depends on your needs, but my two favorites are:
The reason blockchain exists is because it’s public and everyone can verify all of the records. If you’re putting that behind a wall that only you have access to, then it’s merely a ledger in an internal network. When a blockchain becomes private, you reduce the need for half of the feature set that blockchain provides like trust, authentication of messages, etc. You’ll be better off using a database or a message bus. They’ll run faster, they can also be encrypted, and they’re less exotic technologies that people actually know how to use.
As allergic as I am to blockchain, there are some uses of blockchain technology that I think are valid – bank records, land records, or any product where you may have inventory that’s being bought or sold on a marketplace – especially a peer-to-peer marketplace where you don’t have a trusted intermediary like an Amazon.com. So essentially non-trusted marketplaces that you need to establish chain of custody. The latter, however, is a very narrow use case.