This will probably be my last post for the time being and and will probably post again maybe 3 months from now.
Blockchain is the Internet Deja Vu
So, the Nasdaq Index’s parabolic growth has finally ended.
I think there are still a lot of skeptics in regards to blockchain as there are subtleties that are hard to understand. So I will lay out my thoughts as to why blockchains are valuable.
Profitable companies create values and there are many ways to create values. One way that has consistently created values is moving things more efficiently. That’s how cars have basically replaced horses as a new medium of transporation. Internet is probably the most efficient mainstream medium of moving information. Now, blockchain technology valuable because I see it as an efficient way to move money. Even today’s world where so many things are digital, the infrastructure behind moving money isn’t that great. Stripe, which is a company that moves money, is only about 10 years old. There were companies like PayPal, but Stripe has shot up to where it is because it was just better at removing friction that existed when moving money.
So one would ask, how would blockchains actually make things better?
Just looking at B2B payments alone, things are still very messy. Some rely on paper works and manual processing. Each country has its own regulation and moving money across border are not that easy. KYC and AML processes will make things even more worse and there is a risk of fraud getting involved during the whole payment process. Now combine that with all kinds of different payment processors and gateways. The field itself is very segmented and requires multiple channels to communicate information. There are late payment dispuates, chargeback (frauds) and even money/account freeze. Now add on top of that some banking errors. Human intervention along the way make things worse. Basically the field needs better software tools and more secure automations. Blockchain APIs are way easier to deal with than some antiquated software. The difference in developer talent pools and activities between antiquated software companies vs blockchains is actually quite noticeable.
Also, I think blockchains will not only capture markets for moving money, but for all kinds of digital assets. With the younger generations getting accustomed to purchasing digital items, it is just a matter of time before the markets for digital assets grow bigger and bigger. It is also very likely that some physical assets will be mapped into digital assets and moved on blockchains.
The above are what I envision blockchains will do in the future. I have high conviction that what I have mentioned will actually materialize.
Now, things get more interesting with blockchains, because not only blockchains have potential to create values, they also have secure ways to distribute them in a decentralized way. That trust, I think will ultimately make the blockchain industry succeed. If you are an investor, you just have figure out which projects are driven by technically capable people with genuine motivation as they will be ones that will survive and bring values to the world.