Does Blockchain Technology Add Real Value and Can it Survive a Potential Bursting of the Crypto Bubble?

Blockchain technology has seen a significant rise in its utility, particularly in business-to-business (B2B) transactions. Its ability to enhance transparency and security in various aspects of commerce makes it a valuable asset, but it faces challenges during times of market volatility.

Value Added by Blockchain Technology

Blockchain adds real value in the realm of B2B transactions, primarily through its use in auditing account ledgers, ensuring the receipt of goods, verifying payments, and preventing or tracking counterfeit products. In countries where businesses might attempt to cheat their employees, blockchain can also serve to verify payments securely.

Blockchain as a Decentralized Solution

The core benefits of blockchain technology stem from its decentralized nature. This prevents any single group from controlling the system, which is crucial for maintaining integrity and preventing fraudulent practices.

Surviving the Crypto Bubble

Despite the hype surrounding blockchain technology and the potential bursting of the crypto bubble, the technology has a strong foundation that allows it to survive such challenges. Blockchain's ability to address complex issues in a secure and transparent manner ensures its long-term relevance and viability.

Current State of Blockchain

While the current market can be described as a textbook bubble with many both legitimate and questionable blockchain applications, the potential of blockchain is undeniably present. Specific applications like the private blockchain may be misleading, as they often refer to a shared database rather than true blockchain technology.

Technological Myths and Realities

The reality of blockchain technology often differs from its perceived advantages. Many proponents suggest that blockchain is ideal for overseas money transfers, but in practice, the process is often more cumbersome compared to more established solutions like TransferWise, which offers faster, cheaper, and more convenient services.

Another claim is that smart contracts within blockchain technology hold real promise. While this is true, betting on a technology based on vague potential rather than concrete achievements can be a poor investment strategy. Additionally, the Lightning Network for Bitcoin, while promising, heavily relies on the underlying blockchain, somewhat negating its purported advantages.

Energy Efficiency Concerns

One of the primary concerns with blockchain technology is its energy consumption. For instance, Bitcoin’s blockchain already consumes as much power as the entire nation of Serbia. This high energy consumption presents significant environmental concerns and adds to the costs of implementation.

While certain applications do require extensive cryptographic security, such as tracking expensive assets or transferring units of currency, many proposed uses for blockchain could be better served by more basic shared databases with assigned permissions.

Conclusion

Blockchain technology, in its essence, is a distributed ledger that enhances security and transparency in various applications. While certain aspects of the current market for blockchain may be overhyped, the foundational aspects remain strong and promising. Businesses and investors should carefully evaluate the applications and potential of blockchain technology before making investments to ensure they align with true value and sustainability.

Keywords: blockchain technology, crypto bubble, business applications