Three years ago, blockchain was announced as the ‘next big thing’. Among other things, the technology would fundamentally change the way we exchange value among ourselves. But today there is a perception that blockchain hasn’t lived up to expectations. ‘This is unjustified,’ says blockchain expert Sander van Loosbroek. ‘Major steps have been taken in recent years and the technology is ready. It’s now up to the real entrepreneurs to get started with it.’
The mindset: entrepreneurship as the key to success
The leitmotiv of this conversation is entrepreneurship. If you want to be an innovative player and embrace new technologies, you must first of all dare to become an entrepreneur again. Blockchain is the perfect example of this. The technology is ready, but are we? Sufficient material for an interesting chat!
Let’s get straight to the point. People sometimes ask you why blockchain isn’t taking off. Why the tone of disappointment?
Sander van Loosbroek: ‘I don’t think disappointment is the right word. It’s more that people are wondering what’s already available or how long it’s still going to take. It is important to distinguish between technology, on the one hand, and a complete product, on the other. When people see a blockchain-based product launched on the market, two things often come up. ‘
‘First of all, the solutions often turn out to be insufficiently suited to the needs of the customer. For example, an interesting pharmaceutical track-and-trace application might be under development, but as a fruit trader, it’s not much use to you. Secondly, people sometimes find blockchain too expensive, which surprises them since they thought it was based on open source technology. Both disappointments are understandable, but they have little to do with the technology itself.’
But are these observations justified?
van Loosbroek: ‘You can’t argue with the needs of the customer, but the wrong conclusions are often drawn. When we manage to work with blockchain effectively, companies do see the opportunities that the technology offers them. Yet today people often don’t know enough about what blockchain is and what it can mean for them, and they lack a hands-on approach to finding out. Nevertheless, this is the starting point.’
‘Today, there is a clear distinction between companies that are serious about blockchain and companies that consider it a fashion statement.’
So, simply claiming that blockchain isn’t taking off is missing the point?
van Loosbroek: ‘Exactly. It’s unfair to demand new technologies, but then do nothing with them once they’re ready to use. People simply haven’t looked into blockchain deeply enough and often let themselves be deterred by misinformation and poorly-informed public sentiment. They then draw all kinds of wrong conclusions, adopt a passive attitude and wait for someone else to try it out first. But that kind of attitude is obviously not going to get you anywhere.’
‘Incidentally, I think this is typical of our time. We no longer think in terms of goals, but in terms of results. No one wonders anymore how we can achieve these results. While the first goal should always be to see if you can really do something with a new technology. And if you then notice any low-hanging fruit, then obviously that’s where you direct all your effort.’
Are people’s concerns perhaps a result of the hype around blockchain?
van Loosbroek: ‘That has undoubtedly played a part. Because of the hype, all kinds of scenarios and expectations are ascribed to blockchain that often prove to be incorrect. Here’s a good example: the pharmaceutical industry thought you could share medical data with blockchain, which isn’t the case. Or at least not in its present form, or in the near future. The reason for this is very simple.’
‘Blockchain means transparency: sharing information people can trust. But with medical documents, on the other hand, everything is “safety first” and “top secret”. There’s a paradox here which results in blockchain not living up to its promise. So, is blockchain suitable here? No. Is that bad? No again. Is blockchain therefore a useless technology? Of course not. But you have to look for the particular cases where blockchain can make a difference today.’
Actually, your argument can be summarised in one core value: entrepreneurship.
van Loosbroek: ‘Exactly. Today, there is already a clear distinction between companies that are serious about blockchain and companies that consider it a fashion statement. Then there is the difference between entrepreneurs and buyers. Real entrepreneurs do a proof of concept and develop a good business case. They study the benefits, smell the potential and step on the accelerator. Buyers, on the other hand, wait until it’s too late to make a difference themselves.’
‘It is precisely this entrepreneurship that is crucial to making new technologies a success. If you have enough evidence that blockchain has potential, then investigate it. If your research subsequently shows that you were right: great! But if your suspicions turn out to be wrong, also fine. At least you have exhausted all the options.’
As blockchain experts, what is your most important task?
van Loosbroek: ‘Our task is twofold. We know how to build applications. We also know how to do it well and even quickly. But the previous step is at least as important. It is our job to guide companies and see if blockchain can mean anything to them, because that certainly isn’t always the case. A specific technology is simply more suitable for one solution than another.’
‘In fact – and this may seem contradictory – it is up to us to disprove the hype. We help companies to make the right decision themselves: should they take the lead or has the ideal moment not yet arrived? Whatever choice you make, it should always be made on a good foundation. But it’s safe to say that a lot of great projects with concrete roadmaps have already been carried out and drawn up.’
The technology: from alpha, beta and tinkering to ready for production
We’ve spent enough time harping on about the importance of entrepreneurship. Let’s take a look at the technology itself and take stock: where do we currently stand with blockchain?
van Loosbroek: ‘Since 2015, giant steps forward have been taken. Whereas blockchain was only in its alpha, beta and tinkering stage until about a year ago, today things are completely different. Blockchains have become much more technically mature. We are at the stage where we can quickly build ready-to-use blockchain applications and market them.’
‘In concrete terms: this year, Hyperledger Fabric went into production, the company Parity developed an enterprise client to start with Ethereum and Corda has only just released Corda Enterprise. These are three big blockchains that all have a production- grade framework ready. And believe me, they are way better than those that were developed in 2015.’
And yet this doesn’t seem to correspond with many people’s perceptions?
van Loosbroek: ‘That’s the strange thing about it. There are already many effective blockchain applications, but no one’s shouting it from the rooftops. Not every initiative is packaged in a press release or makes the global headlines. But that doesn’t mean that blockchain doesn’t work well.’
‘You are going to see more and more applications emerging, such as applications to trace raw materials, an airline loyalty programme or new currency exchange solutions. And they will all have one thing in common: they will be built on blockchain technology. In short: blockchain is already being used much more than we realize.’
What about the costs?
van Loosbroek: ‘Testing with blockchain has become much more affordable. Whereas in 2015 it still cost a small fortune, since mid- 2017 we have been able to validate concepts for less than ten thousand euros. Competitors have seen this too of course and are starting to offer it themselves. It’s a sign that the available knowledge is growing and that experimenting with blockchain is justifiable. The maturing of the platforms has obviously played an important role in this.’
Yet it is only the early adopters who are taking the first big steps today. The rest will follow … right?
van Loosbroek: ‘Of course. That’s how it always goes and it will be no different in the case of blockchain. Companies will eventually jump on the bandwagon when they see that their competitors have been able to realise such great advantages with blockchain that they themselves start suffering some serious disadvantages. A concrete example: if a supply chain design soon becomes 20 times cheaper than that of a competitor, the latter will have no choice but to follow.’
‘Keep in mind though that even if blockchain is the smartest way to build something, this doesn’t mean that you should immediately get to work with it. The costs incurred by writing off your existing solution more quickly will not outweigh the initially limited benefits of blockchain. However, as the application and market develop further, you will have a better foundation: you will be able to expand more easily, you will have a scalable ecosystem, etc. You will often only experience the advantages of a new technological foundation after a few years.’
Let’s close with some advice. What parting words do you want to share on the topic of blockchain?
van Loosbroek: ‘Don’t rely on rumours or half-baked opinions. Entrepreneurship will make all the difference. If you see that blockchain might mean something for your company, start off by daring to be enterprising again. In this way you can capitalize on the technology’s many advantages and gain a crucial headstart on other parties who just wait until it’s an off-the-shelf solution.’
‘Blockchain is already being used and works very well, so what are we discussing?'