The future of blockchain is not Bitcoin

Coming back from some crypto events, from Zug to Dubai, passing through Lugano’s Plan B Forum, I brought home one thought, which is more of a question. Can you have a blockchain community engaged and empowered (securing transparency and liquidity for its coin, like for Bitcoin,) while abiding by the strict rules and requirements of institutional enterprises, like banks or pharma, who want to enjoy the efficiencies of distributed ledgers, but must align with industry standards and national laws? Is Bitcoin the future of blockchain? Nope.

Can a bank have all data stored in its own country and use the potential of a chain, without upsetting the community, who may reside in countries that its government deems as non-compliant or struggle to trade with, like China? Can an industrial group keep information fully private and differentiate itself vs. competitors, by using blockchain to certify world-class operations and engaging New Gen-s with crypto perks and benefits?

After 10 years of Ethereum, which is the ultimate incarnation of first generation blockchains, this dilemma remains unsolved. Will business or government use Bitcoin or Ethereum, knowing the majority of transactions are approved outside of their jurisdiction? Blockchains failed corporate and the majority of individual investors.

Why? Ledgers don’t guarantee scalability, as costs and finality of transactions trail behind non-chain networks like VisaNet. All big chains (like Ethereum or Solana) don’t accurately measure and really reward quality among nodes’ owners or coin holders. They don’t contemplate the modularity required by heavily regulated businesses, let alone being certified from HIPAA or FDA, just to mention two. Chains are still infested by bad actors, and we all know that and accept it, alienating B2B use cases and long-term institutional investors.

On the other side of the dilemma, if I am a miner or a fan operating a node, all I want is a chance to prove my worth and a fair compensation for being a member, breaking the oligopoly of the big whales, who reap most of the benefits awarded by mechanical algorithms. If I own a token, all I need is liquidity and some predictability of price, which may be enhanced if enterprises join the party, as their game is always long-term. A high-quality blockchain that rewards reputation and progressively kicks out malicious actors will benefit both token holders and businesses.

Is there a way out? There is new chains coming up, whose workings are meant to give enterprises the modularity and security needed to operate in heavily regulated markets, while giving the community features like proof of reputation and higher compensation vs. standard chains, so that acting as a decent community member can turn into a true source of income, while breaking the cartel of all other extremely concentrated chains’ communities, including Bitcoin.

Without making this piece too technical, the dilemma of serving community and business equally well comes down to choice. My options must be different, whether I am the CEO of Pharma Inc. or Bank Inc. (fantasy names) or am a young blockchain-head, based in Nigeria and just wanting to make a living out of Web3. It’s marketing 101. You cater to the needs of two different audiences, and you need to do that beautifully.

Businesses require protection, localization and audit protocols, while reaching new audiences that only public chains can unlock. Nodes’ operators and token holders want fair treatment and higher incentives vs. a mere speculation scheme, or they will always remain day traders.

Technology can solve this. The story of New Gen chains (and, there is many of them) is one of wanted and designed-for innovation, which will become the new industry standard. We need choice. We must have decentralization, privacy and ability to segment a chain. The world needs massive amounts of efficiencies, and there is room for more than one, dominant player.

A new chapter opens in the history of blockchain. It’s made of innovation on the business side, thanks to national compliance, speed and efficiencies, and of innovation on the community side, with higher incentives, proof of reputation and a long-term plan for its token, which will make the community tangibly richer and engaged.

10 years of blockchain went by, and we – the blockchain people – disappointed business and consumers, except for a minority of individuals (let’s say it), who got rich, still call the shots at the Top 50 chains, and hijack the media debate. We need better for the next 10 years. We need to equally serve community and companies, making chains and crypto fair and business friendly.

Written by Frank Pagano.
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