Blockchain Technology Interest Waning – OSCON

Fibo Quantum

The O’Reilly Open Source Convention (OSCON)
is an annual convention for the discussion of free and open source software.
Open source has seen tremendous support over the last decade after going
through a dark winter of software commercialization in the 80s and 90s. A
historical turning point was when Netscape released the Netscape Communicator
internet suite as free software in 1998 and the source code was used to spur
Mozilla Firefox, Thunderbird, SeaMonkey and KompoZer.

Background on Open Source:

Proponents of Free and Open Source (FOSS)
during the 90s included heavy weight Microsoft, Oracle and IBM. For instance, a
Microsoft executive stated in 2001 that “open source is an intellectual
property destroyer. I can’t imagine something that could be worse than this for
the software business and intellectual-property business.” Fast forward nearly
two decades, and Microsoft has reversed direction, and is pining for the open
source community to accept the company as a contributor and supporter of open
source.

Tim O’Reilly of O’Reilly Media, and the
founder of OSCON, was at the strategy session in April of 1998 when the term
open source was coined. Open source software today has won the war with most
software development containing open source code and many previously opposed
corporations changing their stance to support FOSS. According to the Open Source Initiative, the movement
has caused a $60 billion loss for proprietary software, which correlates to $60
billion in customer savings per year.

This year’s conference reflected the
relative calm confidence around open source development with most keynotes used
for marketing purposes to win over the attendees on using their services rather
than anything news breaking. Google, Amazon, Microsoft and IBM were among those
bidding for the crowd in the keynotes.

Interesting enough, O’Reilly’s insights
showed blockchain technology losing interest from software developers in the keynote
on developer audience insights. The term fell 18 points in their rank points to
number 26 on search terms. Kubernetes, the open source container framework, was
effectively number 1.

According to Brian Behlendorf of
Hyperledger, blockchain technology is not likely to create the next Amazon or
Google as it’s more of a cooperative consortium. In his session, “2019: Year of
professionalization for open source blockchain,” he pointed out that 45% of
companies stated they would join with their competitor on blockchain technology
development.

With that said, 80% of companies have not
put blockchain technology into production and the market is very early. Many
mistakenly think blockchain technology is synonymous with crypto, however, some
of the most compelling use cases today include traceability with the food
supply chain, judicial consortium chain, routing and settling insurance claims,
and digital identity within businesses and government agencies. These uses are
currently being explored by companies, such as Wal-mart with FoodTrust, LegalX
Chain, the Intelligent Health Care Network and the OrgBook.

Here are a few more companies putting
blockchain technology into use:

  • NASA for secure flight data
  • Honeywell for used aircraft
    parts market
  • Chinese Central Bank’s has
    processed $4.36 billion on blockchain trade platform
  • Malta is using smart contracts
    to initiate and register rent remittance
  • Visa is planning to join a
    growing list of blockchain-based international payment providers

Behlendorf also pointed out that the United
States is more averse to centralized technologies overall. Intermediaries in
finance, such as SWIFT, are more comfortable for people in the United States
compared to other countries around the world. 
Therefore, the trends presented by O’Reilly may not be reflective of
blockchain’s use globally.

In addition, venture funding in blockchain technology
has reportedly tumbled 60% in 2019 from $1.6 billion, down from $4.1 billion in
venture funding in 2018, according to CB
Insights
. Taking a closer look, CB Insights reported an increase in early
stage funding from 80% of equity deals in 2017 to 88% of equity deals in 2019,
with funding nearly non-existent at Series D and E.

There are a few conclusions you can draw
from this information:

  • Blockchain technology is
    incipient and not able to stand up to the premature pressure that initial coin
    offerings placed on the technology. With ICOs now fizzling, there is more
    wariness around blockchain than what is deserved (and scaring off VCs)
  • Blockchain technology is less
    of a venture-funded effort and more of a development effort, like a programming
    language or an internet protocol, with not much ROI to offer investors
  • Blockchain technology will be
    developed in-house at companies rather than requiring a startup ecosystem
    (similar to a new programming language)
  • Crypto is consolidating and
    other industries will need to be the impetus for blockchain’s commercialization
blockchain-technology-developer-audience-insights

In the early 2000s, Python was a neglected
programming language. Today, Python is the most widely used programming
language, with the majority of the growth in the last five years. I think we
are very early on blockchain and its potential should not be dismissed.

Major-growth-programming-languages

Conclusion:

Blockchain databases are revolutionary and
will disrupt the way many industries record and share data (beyond the
financial industry). The recent withdraw of blockchain development interest is
very common for new technologies. You can think of disruptive technology
products like an ocean wave that comes in stronger with each attempt. Crypto
pushed blockchain too hard, too soon. The market saw dollar signs rather than
carefully architecting sustainable blockchain applications. We will be keeping
an eye on companies for cheap, early investments in this area.

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