The graph on top shows successful ICO’s are getting rare. A few project have ROI, Investors got rekt. The market is finally right. Let’s look where blockchain goes next. Lets analyze the other fields of usage of the blockchain. On the fly you understand conditions for an ICO.
Blockchains knows 2 major fields of applications: Certificates & Smart contracts
I discuss digital value on certificates & Smart contracts. The two fields of blockchain applications are linked. Certificates are static, Smart contracts are part of a process. For example: after creating watertight (business) or value added procedures, it makes sense to store some created digital values. Storing “digital value” without proper procedures or flow has limited usage.
Keynes’ Theory tells that for coins or certificates (or money) there are 3 motives for usage: The transaction motive (the need for coins for the current transactions) , the storage motive (coins buffer for the for unforeseen) and the speculation motive (take advantage of market). The ICO’s are based on the last motive only. There it goes wrong. That’s one reason why ICO’s are prices are down.
Prices in ICO are also down because anyone can make some coins. Go to Github, download some code and make some coins, even become an ICO banker. Many quick fake ICO’s. Blockchain is a free, like the internet itself. The only difference is that you go on the internet with a modem and on the blockchain with “wallet”. Fisher’s “quantity theory of money” helps to explain what you feel. where MV = PT. M is the quantity of money, V is the speed money flows round the economy, P is the level of prices and T is the number of transactions. “Good money drives out the bad” is also an economic law at work. Let’s look at digital value in depth.
The first field of blockchain applications: storing digital value.
Digital value is more than just issuing e-coins/ICO’s. Digital e-coins are only a SUBSET of a larger family of digital certificates. All can be made or stored on a blockchain. Government permits or product certificates are great to store on a blockchain. For example: a driver permit or a eco/green certificate.
Most ICO’s are not grounded in real value or approved procedures
ICO’s are often just not embedded in the real society. Coins must be accepted, not only made for speculation. For example: A certificate must also be accepted by a government and the people. Official certificates are by definition government regulated. Then a (eco/green) certificate supported gets more value and recognition. Most “green coins” do miss support from official institutes. Self made Semi public/commercial new certificates could make a chance.
The regulation of certificates and coins remains an issue.
Governments suffering resistance to change. Certification is a core government task and therefore need a problem first to act. Governments do never cut in their own meat. The problem of innovation comes also unseen, very fast and from another continents. Blockchain is a once in a generation disruptive technology governments cannot handle.
The EU does not have a government regulated blockchain.
In the EU this blockchain infra structure is just not there.
The US has Ripple, offering government nodes (own servers) to watch along (regulate) what happens on the chain. EU blockchain regulated certification does not exists in the EU. No serious EU plans plans exists either. EU is tech unaware or resistes to change. It does not matter a lot in our fast world. A missed train. Here I wrote another article of the missed opportunities of the EU/central banks. The de facto standard or blockchain infrastructure for the EU could come from Switzerland, Sweden or Malta. China or the US are serious candidates to rule these waves of global certification & regulated blockchain standards.
Owning government regulated blockchains and certificates is a global strategic battle.
The owner of general accepted certification blockchains could run the internal procedures and can store digital values within another country entities. On the blockchain you can collect tax, exchange valuta or introduce e-coins (be a internal banker). Business can even create a micro blockchain economy that’s Brexit neutral or bend a supply chain to a tax heaven.
Blockchain is global once in a generation technology, very efficient, & hard to stop. Technology is something that's just there and never it cannot be stopped ever. Burning books did not work in the middle ages. Central banks cannot stop blockchain. Its not their task. The only constitutional task of central banks is to issue money and regulate prices. Even “who” should issues coins and was never written down in the constitutions. Therefore Sweden could therefore introduce the e-Krona fast. EU and other countries need a time consuming political debate first. A blockchain based system can handle both tasks of central banks better in many ways. Blockchain enables value exchange. Until now, selling, buying or exchanging assets has required an intermediary like a bank. People can bypass banks now. Even most of the Brexit and Euro discussions are technological outdated. There is a lot to discuss.
Digital certification are at the core for the global supply chain, valued at 20 Trillion a year. It’s the primary process we all work for. Governments (legaltech) and banks (Fintech) their task is merely to support the primary process. That’s why it’s called the secondary process. The secondary process must prove it’s value added from scratch. Every generation has to reinvent itself.
Blockchain certification is essential for an circular or green economy.
We also know that the global supply chain, the primary process, is polluting us. Only blockchain certification can solve the economic riddle of negative value of all waste in an effective and efficient manner. We all know that economic systems are evolutionary experiments and need improvements. Blochain is the missing toolbox we need. I cannot see a green world without blockchain certification. Other mechanisms to organize a green world are just not available.
Conclusion for investors is to go there where the necessary government understanding, participation, blockchain infrastructure exists. All economic, social and technical thinking must be brought under one new redesigned roof.
The second main field of blockchain applications are smart contracts.
Smart contracts solve compliance issues. Solving compliance issues is dynamic, its a (business) process approach.
This is a great field to invest in. 80 % of the work is in the total field of blockchain tech work is to be found in this corner. It’s free field for entrepreneurial initiatives with huge ROI. Blockchain tech is charming simple. If you define your internal procedures well, the need for coins or certificates. Those are mostly made for external use or partner earning models.
I hope you understand all these newly mixed paradigms. If not, please do read this 3 minute post to understand blockchain basics: The Milkman as an analogy for the Blockchain.
What’s ahead ? I expect that the governments soon realize that they also wants to see, regulate, read and write smart contracts.
No government mentioned the idea of regulating or even reading smart contracts till now. For example. No judge stumbled over the problem of finding a reference to a smart contract in a real contract until now. I explain the judge his problem. If a preamble(consideration) of a real contract express the will of parties by using a smart contracts, then this comes a new kind of problem. Smart contracts are in Java or C++ and the court cannot understand the code. Is the judge does not understand the preamble/consideration, he cannot judge that contract. Hiring programmers to “translate” does not work in the long term. Courts usually demand a readable language and even demand a lawyer to be sure parties express themselves in a efficient manner. These arguments of contract readability and efficiency count for all branches of government. There is an charming solution for this problem. Please find it below.
BKS delivers an solution by providing a Natural Blockchain Language (NBL), so all can read and write blockchain without error in a natural manner. We teach managers or lawyers & accountants can write and read error free blockchain themselves using a NBL Smart contracts are like real contracts, once referred to in the consideration of a real contract, there is a need to understand the smart contract. Our NBL enables managers to produce error free executable blockchain code faster. The compiler does the work, generates executable Solidity for Ethereum or Quorum blockchains.
More important than speed is that our NBL makes that lawyers or managers can understand (R/W/Validate) blockchains and that code is error free. Blockchain is write only, hence errors cannot be removed!
The NBL comes with a simple 2 STEP methodology to grantee ERROR FREE code: First, the the natural language input texts can be validated for correctness by domain experts. Second, compiler does the work and compiles to executable blockchain. All brought in your Natural Language: