Blockchain is a rapidly evolving term. A decade ago, people threw the word ‘digital’ around in a similar way.
"…creates immutability and transparency, which removes the trust required from a third party."
Blockchain describes the way that bitcoin uses a distributed ledger (or, database) to create immutability and transparency, which removes the trust required from a third party in traditional data models. Using bitcoin – with blockchain as the backbone – the currency and the payment rail are intertwined without a central authority. This initial system inspired anarchists, libertarians and tech enthusiasts.
Around 2015, enterprise began to take blockchain seriously and Ethereum emerged as a system that allowed for the creation of smart contracts. A smart contracts platform for a variety of uses and workflows was a novel ideal that further inspired large players to take notice. Blockchain labs and trials were everywhere; industry consortiums began to form and new “coins” began to appear. Then ERC-20, the futuristic-sounding code for a standard that allowed anyone to create a token, started to take off. Developers were able create new tokens overnight. Many did. Companies were able to launch new businesses with by launching and crowdfunding tokens.
The rapid rise of crypto-financing
June 2017 to January 2018 was the Wild West of crypto-financing. Anyone and everyone got involved in the craze. Celebrities, crypto-big shots corporates and scammers were all fighting for attention.
"…ridiculous spikes in crypto-currencies have given way to a more mature industry."
The regulators soon began to scrutinize the industry and the bar has continued to rise. Upwards of $40 billion has been raised by token offering since then. Today, fast-money ICOs (initial coin offerings) and ridiculous spikes in crypto-currencies have given way to a more mature industry that is more conservative. Institutional investors have outpaced casual crypto investors as drivers of growth. New token companies need to be more grown-up and spend a larger percentage on legal, marketing and actually building their products before they push their token wares. Security tokens are rising, and enterprise companies are starting to move beyond limited trials. The number of new crypto-companies continues to grow, and the public is starting to see the potential for blockchain-based solutions. The next wave of growth will evolve sector by sector. Energy, government, marketing, real estate, consumer services and many other industries are pushing blockchain forward. We are a year or two away from early mass adoption.
Overnight unicorns have enough funding to become tech giants. Many will fizzle, but some will rise. The winners of the token wars have the potential to define blockchain for the next generation.
So, what is blockchain? Create the next big token and you could be part of the definition.