August 8, 2018
According to Forrester Research, many blockchain-based software projects are ending this year and 90 percent of them will never be integrated into the companies’ operations. Blockchain/cryptocurrencies advocate Nasdaq stated in 2016 that it would deploy blockchain for voting in shareholder meetings, but has yet to deploy any large-scale project. The initial enthusiasm over blockchain seems to be dying down, while some traders are manipulating cryptocurrency prices to enrich them but leave investors in the cold.
The Los Angeles Times reports that Nasdaq senior vice president/head of product management for market technology Magnus Haglind said that, “the expectation was we’d quickly find use cases.” “But introducing new technologies requires broad collaboration with industry participants, and it all takes time,” he added. Companies are drawn to blockchain for its ability to provide “a tamper-proof digital ledger,” but as they try to integrate it into their businesses, they encounter “problems with performance, oversight and operations.”
“The disconnect between the hype and the reality is significant — I’ve never seen anything like it,” said Gartner analyst Rajesh Kandaswamy. “In terms of actual production use, it’s very rare.”
According to WinterGreen Research, IBM and Microsoft have captured 51 percent of “the more than $700-million market for blockchain products and services.” LAT reports that IBM has “more than 1,500 employees working on blockchain.” Microsoft issued a statement stressing its optimism about blockchain’s future prospects and reiterating its commitment to the sector.
In comparison, a Gartner study reveals that only 1 percent “of chief information officers said they had any kind of blockchain adoption in their organizations, and only 8 percent said they were in short-term planning or active experimentation with the technology.”
Among those companies that initially said they would launch blockchain operations and have held back on doing so, the issues include the need for compatible software, the ability to handle a large volume of transactions, and more collaborative projects where the technology shines. Hyperledger executive director Brian Behlendorf also notes that, “they want to see other people fail first — they don’t wanna be a guinea pig.”
The Wall Street Journal reports that, although there have been pump-and-dump schemes — in which “traders talk up the price of an asset before dumping it for a profit and leaving fooled investors with shrunken shares” — with cryptocurrencies, the Securities and Exchange Commission hasn’t taken anyone to task.
“Cryptocurrency exchanges are unregulated markets, so the kind of market manipulation banned on, say, the New York Stock Exchange can essentially be carried out with impunity,” said RPC cryptocurrency lawyer Ben Yates.
Big Pump Signal, with more than 74,000 followers, has promoted 26 pump operations and reaped $222 million in trades. In one pump-and-dump scheme for CloakCoin, the site organized a buying mania before selling, for a total of 6,700 trades worth $1.7 million. WSJ has found 63 groups actively promoting pump schemes. Pump-and-dumps “proliferated during the dot-com boom, pushed by ‘boiler room’ brokerages.
Blockchain at the Ballot Box? Maybe Someday, The Wall Street Journal, 8/7/18