The hype around Bitcoin and blockchain technology was difficult to avoid in 2017 as the value of the cryptocurrency market soared to unimaginable heights. At one point during that year the combined value of all crypto tokens was close to $700 billion or nearly the current market capitalization of Google.
Since then the market has deflated but the hype remains. As with any new technology, blockchain PR and marketing often magnifies the true potential of this nascent industry. Every aspect of the new technology seems game changing and groundbreaking, however investors need to look beyond the hype and hubris to uncover legitimate investment opportunities and pockets of value in this crowded space.
Here are some of the most tangible promises and verified advantages of blockchain technology:
Despite several attempts, the underlying technology of Bitcoin has never been hacked. That’s not to say that Bitcoin has never been stolen – investors have lost millions over the years, but the attacks have exploited vulnerabilities in crypto exchanges and end-point devices to gain access. The blockchain itself has never been hacked or manipulated, which means Bitcoin has lived up to its promise of security for digital transactions.
Similar security is being implemented by startups and new projects that have adopted blockchain technology for their own products and platforms. Investors may be able to uncover value through startups that can effectively mitigate the risk of cyber crime and data breaches.
Another promise cryptocurrencies and blockchain platforms have lived up to is network effects. Essentially, these platforms get more valuable with every additional user or developer who joins the ecosystem. Network effects can be very powerful and have helped create technology giants like Facebook and Airbnb. Investors need to monitor the space for emerging crypto projects that have inherent network effects that can power their growth.
Startups and entrepreneurs can also use traditional blockchain PR strategies to kick start these network effects, which is another aspect growth-seeking investors need to monitor.
Crypto projects like Ripple, Brave Browser, and Monero have already reduced the costs of international transfers and micro-payments. The automated and open-source nature of most blockchains make these platforms an ideal solution for disrupting any industry with high costs, unnecessary middlemen, and high barriers to entry.
With lower costs, blockchain technologies could someday streamline the process of storing healthcare records, making donations, exchanging currencies, and buying property. Startups that can leverage these lower costs to gain market share in high-cost industries will benefit the most.
The open access and transparent nature of public blockchains could help redesign the digital world. Instead of gatekeepers for private data and public social interactions, users can use open platforms like Openbazaar and Cent to sell goods and make connections online.
Blockchain technology could make the global internet a more level playing field by wrenching power away from the big tech corporations that dominate it today.
The impact of cryptocurrencies and blockchain technology is becoming more apparent as the industry matures. Investors need to dig deeper and look beyond the mainstream blockchain PR and marketing to see how these mega-trends can benefit their portfolio.