Is Blockchain Losing Its Luster?
Is patience with distributed-ledger technology already starting to diminish after a hyperbolic year?
![blockchain blockchain](/sites/default/files/styles/landscape_750_463/public/import/IMG/868/339868/blockchain-580x358.jpeg.webp?itok=1fSauXY4)
Consider one of this year's most built-up video games releases: No Man's Sky. An extended and intensive marketing campaign promised the best game of its generation and players, myself included, couldn't wait. The backlash when those promises failed to materialize was instantaneous and vociferous.
This seems to be the way of things now—the greater the hype cycle, the quicker the inevitable backlash will be.
Blockchain, for all its potential, has a long, long way to go yet and even the most optimistic among the industry put that arrival timeframe at anywhere between three and 12 years.
But what about the here and now? Almost every large institution on the sell side has signed up to a DLT project of some variation and many of the biggest names around have become part of the R3 CEV consortium.
Founded in September last year, R3 counts JPMorgan, Barclays, State Street and, most recently, MetLife among its members, but some cracks have started to appear in what seemed to be one of the most powerful blockchain projects out there.
This week, it was reported that Goldman Sachs and Morgan Stanley had withdrawn from R3 and would no longer be investing in the group. Santander has also left the consortium, according to Reuters.
Shifting Expectations
The Wall Street Journal and Reuters have both reported that Goldman Sachs were unprepared to participate in the consortium's current funding round, despite R3 reducing its target from $200 million to $150 million.
From a financial-only standpoint this make some sense. Pressures to cut costs are higher than ever going into 2017 and these banks may be right to balk at forking out further investments for a technology that won't see the light of day for some time yet.
For it's part, Goldman Sachs has certainly built a reputation for itself when it comes to developing and then zealously guarding its own technologies.
It would also be naive to think that either institution is simply abandoning DLT as a result of the break with R3.
But I have to believe that there is an element of fatigue in the mix as well. It's hard to discuss emerging technologies with anyone in the industry these days before blockchain is mentioned, and sometimes, accompanied by a weary eye roll or two.
Unlike machines, we simple humans do not possess unlimited patience and the backlash against the hyperbole has to start somewhere. This doesn't mean to say that a group like R3 will collapse because one founding member leaves (see: almost all prog-rock bands) but it does seem that cracks are beginning to show.
The buy side has generally been content to keep out of the blockchain spotlight so far and I expect that to continue, at least in the short-term. Arguably under much greater cost and regulatory pressures than the sell side, I think most asset management firms have enough to deal with for the time being.
This isn't the beginning of the end or the start of the Great Blockchain Exodus of '17, but perhaps instead that patina surrounding blockchain development efforts isn't quite as shiny as it was hoped to be.
After all, the greater the hype, the greater the backlash.
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