By Joel Comm

Joel Comm is an internet entrepreneur, NY Times best-selling author, live video marketing expert and keynote speaker.
(Disclaimer: Author holds investments in bitcoin and Ethereum.)

The challenge was laid. Hands were shaken. The bet was placed.

Or so it appeared anyway.

At CoinDesk’s Consensus 2018 conference this year, Joseph Lubin, founder of Ethereum company Consensys, agreed to wager “any amount of bitcoin” with Jimmy Song of Blockchain Capital that within five years, the blockchain would have a number of working applications serving real users.

That’s probably a bet worth taking. Hundreds of millions of dollars have already been invested by some of the world’s biggest companies on the future of the blockchain.

JPMorgan has a blockchain program. Barclays’ Accelerator, a 13-week program for startups organized by one of the world’s biggest banks, has provided space and funding for a number of blockchain-based fintech companies. Businesses working on blockchain-based services include IBM, which is trying to build a tracking tool for shipping companies and retail chains, Eastman Kodak, which is experimenting with the blockchain to create repositories for stock images, and Spotify which wants to use the blockchain to manage copyrights. Investors in blockchain projects include Peter Thiel, Sequoia Capital and Andreessen Horowitz, as well as Google, Goldman Sachs, Visa and Deloitte. All of those companies and experts are betting millions of dollars that a decentralized ledger can do things that other forms of technology just cannot.

They’re likely to be wasting their money and their time … but not all of it.

Critics like Song tend to argue that much of what blockchain-based products are trying to do can be done without the use of a blockchain. A decentralized ledger might be able to help keep track of items flowing through a shared economy, such as apartments, boats and bicycles, but companies like Airbnb, Uber and city bike schemes have all done fine with little more than apps and barcodes. Triple-signed receipts are much easier to implement and meet the same security guarantees as a decentralized ledger with public key cryptography, proof-of-work, networking and database technology. A blockchain can replace escrow services, but would it be cheaper, more secure or easier to use than a bank account and a trusted third party?

Using the blockchain can also remove the versatility that makes startups so agile. New firms in Silicon Valley work long hours to shoot out minimum viable products before their seed funding ends. They refine those products, match them to audiences and show venture capitalists that they’re on the right track — that they can actually make something that people will pay to use — in order to win enough money to reach the next milestone.

Businesses that use an ICO to raise large amounts of funds, though, can behave more like investment banks. They start with lots of money, move slowly to develop their product, and if it’s truly decentralized, they won’t be able to change it when it hits the market. A blockchain could slow them down.

Those arguments are fair, and for anyone old enough to have lived through the early days of the dot-com bubble, they’re also familiar. The late 90s were a time when you could have launched a company selling elephant underwear but as you long as you called it an «internet business,» someone would turn up with a giant bag of money and a belief that you would all be rich.

And you would also have plenty of people willing to tell you that they were crazy and that the whole «internet» thing was overrated and would soon fade away.

Clearly, that didn’t happen. A large number of businesses, companies that never had a real product or offered a proper service beneath their URLs, were left exposed when the financial tide flowed out. But some companies did survive, and the ones that survived have thrived. Amazon is a multibillion-dollar business. So are Google, eBay and Paypal. They were all able to create products on the web that other people wanted to use — and were able to turn that use into revenues. None of them could have existed without the web.

That’s exactly what’s happening now. No one knew when Google started that it would destroy Alta Vista and eat Yahoo’s lunch. No one knew that eBay would leave OnSale in the dust or that a startup called Facebook would kill off Friendster. Investors certainly didn’t, which is why they spread their money around, hoping that some of it would stick to a business with a real product in an entirely new market environment.

The blockchain is ideal for keeping track of a currency and protecting it against fraud. We don’t yet know what else it’s good for. Until developers have finished their work, we won’t know whether it will become the underlying technology behind a rejuvenated sharing economy or whether it will only power banking services, making transactions cheap and almost instantaneous.

The blockchain has already underpinned a new currency. Investors are now betting that it can do something else, and they’re placing their bets on a bunch of new technologies. Most of those new technologies will fail. But some, a few, will succeed. If I were a betting man, I’d put some bitcoin on it.

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