The days of trading assets through complex paperwork and red tape could well be numbered as the world is gearing up to embrace blockchain. This introduces the possibility to conduct online transactions of any assets that can be digitised, whether that be a piece of music or deeds to a house, through a trusted, decentralised democratic system.
All this could impact our lives not by making us rich overnight, but by reducing the cost of trust with the help of a radical approach to accounting and creating a new way of conduct-ing business.
To fully grasp the idea, let's have a look at the 14th century. Michael J. Casey in his book, 'The Truth Machine: The Blockchain and the Future of Everything', takes us on a trip back in time, when people in the Middle Ages were facing a significant trade barrier because of how unsafe it was to travel with high amounts of money for their purchases. So, the Italian merchants and bankers came up with the solution of double-entry bookkeeping to avoid taking cash with them and having a synchronised record about it instead. This later developed into the concept of banks, which was great as it gave all of us access to our money wherever we needed it but the flaw in the system really became apparent in 2008, when the Lehman Brothers cooked their books to such an extent it triggered the biggest financial crisis in 80 years. Up to that point most people believed these large financial organisations to be honest. 2008 proved they can let us down.
The Tokenisation of Everything
Back to 2018. Imagine everyone being able to hold a copy of the book which records every transaction and is append-only. 'Would this remove users' suspicions of fraud and boost their confidence when it comes to the exchange network? Not only that, but also allow open access to third world countries, which can earn their trust and dip into the financial markets or benefit from peer to peer lending. As daunting as it is, making the world a level playing field could mean a better world for all.
If you follow this chain of thought where we've established a framework of trust, and have a platform that supports digitised assets, we could be entering Star Trek territory where the Tokenisation of Everything (TOE) will mean money becomes obsolete and we can exchange anything for anything. Next stop the stars. Proper, big, world changing, future gazing, awesome stuff.
However right now, instead of coming together to create the rock solid foundations of this emerging technology, allowing it to work to its full potential, we're concentrating our efforts on shoe horning buzz words into bad ideas, built on a platform that's not yet enterprise ready, to raise investment funds through Initial Coin Offerings (ICOs) that would not normally get within 1,000 miles of Silicon Valley investment financiers.
'These tokens aren't worth anything'
Not so long ago, people with an idea used to have to follow certain steps to launch a business: develop the project, write a business plan, look for investors and spot opportunities. Since ICOs disrupted the market and became the new vote of confidence, the investment system has become more democratic. Now the investment companies aren't the first ones to find out about a potential opportunity.
This is great in theory - but people are losing their heads over the craze. This is not a tool to get rich quick by fooling people into believing in you. You should feel guilty if you try and raise money for a bad idea because you're destroying the trust and giving the idea a bad name before it's had the chance.
Take the bloke who auctioned for crowdsale a token which he described as being useless: "I can guarantee here and now that the value of UET will not (in fact, cannot) reduce during or after the ICO. Since these tokens aren't worth anything to start with, there's nowhere to go but up!" His description clearly read that the money will go to some random person on the internet to buy electronics with it. Nonetheless, he still raised $127k from 310,445 contributors who either enjoyed being part of the joke, or seriously didn't bother to do any kind of investor homework on the opportunity. This gimmick proves that the ICO industry requires a reality check sooner rather than later.
The potential's there but the same investment rules apply. Investors should be diligent and do their research before committing to a so-called opportunity. If you're going to take a punt make sure it's on a great idea; one which unleashes competition on the market, which changes the way the world thinks and acts.
The ICO phenomenon gets even worse when you think that the very same people that raised funds for their ideas with an ICO may have played a large part in the quite spectacular crash we've seen over the last month. Essentially millions of tokens raised through ICOs have been dumped on public cyrptocurrency exchanges, creating a huge oversupply in the market and prices to tumble. The Ethereum blockchain as ICO playground of choice and it's native currency Ether has been particularly hard hit with a 40 per cent drop over the last month but the ripple effect crosses all blockchains and prices are down across the board.
Lets be less capitalist
In the right context, blockchain could be the best idea ever and we should all be working together to polish this rough diamond. Instead of contributing to making ICOs the barrier that blocks blockchain from ever realising its ambitions, let's concentrate on the potential it could offer. Its uses are unlimited and businesses could use the platform to release their projects to the world.
It would be interesting to see what happens if these people looking to make a quick buck actually focused on the problems and joined forces to make a stable platform for growth. We all have the power to make a small difference and cumulatively that turns into an enormous impact. If we are less capitalist in our thinking, we could actually do something for the greater good. We can all add valuable input to the code and make it better.
What I've learned by working with so many businesses is that whenever we encounter a big idea we have to treat it as a precious commodity so we don't damage it before it can show its value. The devil is always in the detail, and there is still a long way to go until blockchain lives up to its hype and potential. But this is a journey we can take together to make this technology an enterprise-ready solution.
Ross Peet is managing partner at Yes&Pepper, a London-based ideas agency.