Almost five years ago, Overstock.com became the first major retailer to accept bitcoin as a form of payment. Now it accepts many more important cryptocurrencies. As a member of the senior executive team and the board of directors of Overstock.com, I had a front row seat for those decisions.
It did not take long for the Overstock team to realize that the blockchain technology behind bitcoin kept big promises beyond cryptocurrencies. We also knew that in order for blockchain technology to reach its full potential, startup companies using it would need both financial and human capital support.
Overstock set up a venture capital blockchain incubator, Medici Ventures, to do just that.
We believe that blockchain technology can impact many industries. We are already involved in promising developments in areas such as capital markets, money transmission and banking, voting, supply chain, ownership and self-sufficient identity. But there is still a long way to go before blockchain technology can realize its true potential.
Here are the three most important challenges facing the most widespread adoption of blockchain technology right now.
Find good developers of blockchain enterprise-level software
The world has become so dependent on computers, to the point where practically every company now needs software development. In this environment, where the demand grows exponentially, it is difficult to find a good talent in software development. The talent that changes the game is even rarer.
Because blockchain is a new technology field, there are fewer talented enterprise software developers who understand it well. Who does it can practically write their own tickets. Although this is an enviable position for them, it limits many companies from developing blockchain-based engaging and transformative applications.
Remember that we are at the beginning of the blockchain.
At Medici Ventures, we provide regular internal training to help our software developers scale this important learning curve. In this training – which we do in educational presentations that sometimes include accelerated courses – our teams often present discoveries made during the development of a project, with the hope that solutions can benefit those who work on other projects. This approach allows us to cross-contaminate our industries and disciplines, so that creative development and innovation become rising tides rather than isolated peaks.
The time spent learning is worth it; This is why many of our portfolio companies rely not only on our venture capital, but also on our human capital. Until there is a regular pipeline of well-qualified blockchain developers, the lack of great talent will continue to be a struggle for technology progress.
Avoiding the temptation of regulation
Like many of their constituents, Congress and state legislatures are becoming aware of the blockchain. In a sense, this is good news: political commitment will increase awareness and interest in the use of blockchain technology and will help guide the adoption of these new ideas. Unfortunately, it also brings the temptation of regulation in an emerging market.
I worry when legislators and legislators get a breath of all kinds of technological development because they are tempted to regulate it. When the chairman of the Securities and Exchange Commission (SEC) of the United States, Jay Clayton, stated that all initial coin offerings (Ico) were securities rather than commodities, and therefore subject to the regulation of his organization, Clayton brought a ICO boom at a sharp stop. While President Clayton and others in the SEC have subsequently changed this position, this normative tendency to fear the new is dangerous.
The interconnection of the world means that its adoption will probably take root and flourish rapidly.
Technology – and the progress of the blockchain – should not be regulated. In the 90s, when the potential of the internet was becoming evident, the legislators chose not to regulate it. This bipartisan decision has led to the creation of the aforementioned "information superhighway" and the power of the Internet on the open market today.
Of course, there will be use cases that may require regulation while blockchain applications develop and proliferate. But the growth of blockchain technology will be better cultivated when it will be free and free from regulation.
Reaching critical mass
Cryptocurrencies and digital portfolios built on blockchain are great uses of technology. In order for cryptocurrencies to proliferate in use and to stabilize in price, and for digital portfolios to get widespread adoption, consumers have to spend more cryptocurrencies and traders must accept them. A good example of what works the right way is Colu, a new exciting company I saw recently in action when I was in Tel Aviv, Israel. Colu is a digital wallet that uses blockchain technology to create local currencies. People simply download the app, add money and buy locally. The app highlights local establishments and makes shopping convenient. And it's dazzling people in Tel Aviv!
The same can be said of other blockchain-based applications such as secure remote digital voting. West Virginia has recently become the first state to allow foreign citizens to vote remotely using an app blocked by blockchain. The West Virginia program was tested in the May primaries and was used in the November general election.
We will know that blockchain technology has become mainstream when we are no longer talking about it.
Some critics have been quick to despise real efforts to create digital voting with strictly theoretical concerns. In reality, the rollout in West Virginia is a very focused solution on a specific problem: the low participation of voters abroad. The current system is broken. A blockchain-driven digital voting app is a clear solution. Anyone, apart from the critics of progress, should enthusiastically support West Virginia's efforts until there is a real reason to worry.
Once any blockchain is accepted in sufficient numbers on both sides of the use and acceptance, the impressive software will become an invaluable and omnipresent tool. The most widespread adoption of the most beneficial use cases of blockchain will trigger network effects that will multiply benefits.
Remember that we are at the beginning of the blockchain. Many industry observers seem to be in a hurry to declare blockchain a traditional technology. As much as I was enthusiastic about my blockchain support, I would not call it mainstream yet. The interconnection of the world means that its adoption will probably take root and flourish rapidly. We will know that blockchain technology has become mainstream when we are no longer talking about it, but we are simply using it in every way.
I am excited to see the digital purchases made and the votes cast in the elections with this revolutionary technology. While developers, investors and companies continue to focus on the use and progress of the blockchain, we will see that they find good developers of blockchain software of the enterprise level, leaving blockchain free from unnecessary regulations and reach a use critical steps are the next important steps in the growth and adoption of this technology that changes the world.