The fad is dying. A recent CB Insights report that was cited Bloomberg announced a 60% decline in blockchain startup investments this year, down to $1.6 billion. But at the same time, large enterprises such as Microsoft, Walmart, IBM and Samsung have either deployed their own blockchains or joined partnerships to use the technology. Ironically, several banks, such as HSBC and JPMorgan Chase, have also developed their own blockchain arms — the same entities blockchain was supposed to replace. What happened? Why are public chains with the true spirit of decentralization fading away while early adversaries have turned into advocates of the technology?
Slow to adopt — but finally adopting
Governments and politicians were regularly called out for their failing to comprehend blockchain technology. Many initially ignored the crypto boom, which led to the scam-filled craze over initial coin offerings in 2017. Then, they started opposing, regulating and shutting down blockchain projects, which hurt the developing industry. But as time has passed, they are slowly embracing the technology in the right way.
One notable example is China, which had initially banned blockchain projects altogether. In late October 2019, President Xi Jinping took a U-turn by requiring China to make a “greater effort” toward blockchain development in order to gain an “edge over other major countries.” While cryptocurrencies were still banned, this showed that the tides were turning in favor of the still-nascent technology.
Public vs. private
It’s worth noting that enterprises have their own versions of the blockchain: “private” or “enterprise” blockchains. These differ on several fronts from traditional, “public” blockchains.
Contrary to public blockchains such as Bitcoin or Ethereum, not just anyone can join a private blockchain. Each node is specifically selected by the enterprise, which might require Know Your Customer procedures in some cases.
For the same reason,…