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Blockchain is one step away from mainstream adoption - Blockworks
There’s plenty going on with crypto and blockchain right now.
But the biggest news of the year is still the Securities and Exchange Commission’s approval of spot bitcoin ETFs — with $4.5 billion in trading volume in the first 24 hours, all eyes are on how this new investment vehicle will impact public engagement with crypto and blockchain.
Because even though blockchain technology has been in use (and in the public discourse) for over a decade, it’s still accurate to compare its progress to the early days of the internet. Its nascent point in evolution — and clear potential for eventual disruption — echoes Clayton M. Christensen’s disruptive innovation theory, a theory which highlights how technologies overturn established markets.
No matter how revolutionary or unique, fresh innovation remains intrinsically tied to the past. By learning lessons from pioneering technologies that are now accepted as core to life and society, we can navigate the complexities of this next great technological shift.
While there will be challenges in acceptance and utility along the way, I believe blockchain’s path to imminent mass adoption closely mirrors the innovation cycles of past technologies with humble, then astronomical trajectories. And the SEC’s spot bitcoin ETF approval is a moment that signals both validation and acceleration. Let me explain.
Cycle one: Emergence and initial challenges
Like the nascent stages of both the internet and cloud computing, blockchain’s initial phase was marked by enthusiasm tempered with challenges.
Early blockchain adopters — akin to pioneers of cloud infrastructure — faced skepticism, technological hurdles and a lack of clear market fit. Data from the early 2010s reflects a burgeoning interest in blockchain but also reveals the struggles for finding practical applications and widespread adoption.
It was during this period that the cryptocurrency space became the primary use case for blockchain technology. Bitcoin’s rise sparked curiosity and fueled on-chain experimentation. But while the promise of decentralized, trustless systems captivated innovators, its practical implementation faced numerous obstacles.
Scalability issues, regulatory uncertainties and the association of blockchain with volatile cryptocurrency markets hindered its broader adoption.
Blockchain technology was truly in its infancy in the early 2010s. And as with every groundbreaking innovation, overcoming the initial challenges required time, perseverance and a commitment to refining the technology’s capabilities.
Cycle two: Market recognition and consolidation
Within two to three years, blockchain technology expanded from testing labs and hackathons to real world business applications used by global giants like IBM and Maersk. In making the leap relatively quickly, the tech entered a phase akin to the dot-com era’s consolidation — where performance, utility and UX took out the first wave of providers failing to meet enterprise, developer and user expectations.
During this period, blockchain gained crucial market recognition and investment growth, and its solutions began to demonstrate real-world utility. The industry also witnessed the emergence of alternative blockchain platforms like Ethereum, each offering unique features and addressing the limitations of earlier iterations.
The mid-2010s also marked a turning point for blockchain, with a surge in enterprise adoption and a notable influx of tech industry attention anchored largely by progressive larger companies and startups. Although regulatory frameworks began to take shape around the world, country-specific dynamics remained in the path of providing a more stable environment for businesses to explore and implement blockchain technology.
In both the dot-com era internet and blockchain during this phase, viable business models emerged — and along with them, substantial investments that lay the foundation for long-term sustainability. Like dot-com, blockchain was experiencing cracks at the seams as the underlying infrastructure and technology transitioned swiftly from a speculative concept to a legitimate technological innovation vulnerable to system failures, user sentiment and industry scrutiny.
In other words, the enterprise, commercial and potential user spotlight was on, but the backend infrastructure remained painfully slow and the frontend UX remained noticeably lacking.
Cycle three: Dominance and market integration
Blockchain’s current phase mirrors the cloud computing industry’s evolution from nascent testing group populated with startups and risk-taking enterprises into a market staple with room to improve. While there’s still significant progress to make in terms of adoption and onboarding, processing, security, interoperability and UX, the advancements happening on blockchain today are nearing web grade and web scale.
Today, blockchain technology underpins applications across industries, from finance to supply chain management — and this is only the beginning. Recent market analyses highlight blockchain’s expanding footprint, indicating its transition from an emerging technology to an integral part of the global digital infrastructure akin to cloud in Web2.
In my opinion, we’re months and years, not decades, away from people around the world using Web3 to make financial transactions, scroll social media and play games at Web2 speeds — with UX at a level where users might not realize their digital experience is made possible by blockchain.
Blockchain’s growth is already reshaping traditional business processes and models. In the financial sector, blockchain facilitates faster and more secure transactions. Supply chain management benefits from increased transparency and traceability, ensuring the authenticity and integrity of products. Smart contracts automate and streamline complex agreements, minimizing the risk of fraud and error.
And in addition to sparking rising trading volumes, the SEC’s approval of spot bitcoin ETFs sent a global signal of validation to governments reviewing the viability of blockchain applications in both the private and public sectors.
Importantly, the evolution of blockchain has given credence to — and bestowed practicality upon — the concept of decentralized finance (DeFi). We’re already in a reality where traditional financial services are replicated, and even improved, using blockchain technology. This is transformative because it will eliminate the need for intermediaries, opening the door to financial participation for virtually anyone with internet access. This democratization of finance has the potential to provide financial services to underserved populations and redefine the global financial landscape.
The takeaway: Blockchain is on the brink of unique disruption
Today (literally today), blockchain technology sits at the brink of a new era of the internet — one fueled by decentralized ecosystems at web scale.
As we move forward, businesses, policymakers and builders will increasingly search out responsible, interoperable and secure blockchains that have a proven ability to scale and meet the needs of millions worldwide who will be using it daily. Most importantly, we can build a more transparent, efficient and inclusive digital world in the process.
Mo Shaikh is the Co-Founder & CEO of Aptos Labs. He is a 3x founder with over a decade of blockchain/crypto and multinational financial services experience—including a stint on the alternative assets team at Blackrock.
https://blockworks.co/news/blockchain-mainstream-adoption-history