Blockchain

IS BLOCKCHAIN OVERRATED?

Blockchain is the most overrated and, at the same time, underrated technology we have seen in a generation. Most market pundits hold extreme views ranging from a glorified Ponzi scheme to the end of current business practices as we know them.

My sober background in finance does not immediately lend itself to transformational technologies as my experience is deeply rooted in wealth and asset management—however, my industry outlook has arguably been way out there on the fringe of science fiction. One area that has not escaped my attention is the ‘tour de force’ of blockchain technologies, which appears to have Marmite connotations these days, i.e., either you love it or hate it.

I have taken great interest in understanding the underlying technology and likely evolution—the learning curve is less dramatic than one might think. I, like many, foresee blockchain, or more precisely, blockchain infrastructure will dramatically impact our whole business architecture. However, the current rose-tinted euphoria surrounding cryptocurrency and altcoins may be slowing market adoption rather than propelling it, as with big data and AI, for example.

Blockchain infrastructure in simple terms removes the necessity for trust and provides information security between two counterparties—reinventing transactions and facilitating a new era of supply chain automation. But like the plumbing and wiring we take for granted in a building, blockchain infrastructure will be there but out of sight. I am not sure that we will really recognise its multi-trillion dollar impact until a decade or so in the future.

However, I’ve been far more skeptical of cryptocurrency and altcoins, not because I don’t see them as our logical transformation of money, but because the ones making headlines today may not be as successful when we see widespread adoption. That said, I do own Bitcoin, Ethereum and EOS as a healthy hedge against my own ignorance. The area that most interests me is the world of decentralized finance (DeFi) apps, which is where I see blockchain adoption finally ramping up.

I would recommend we start to move away from the Las Vegas-fuelled aspects of blockchain and move towards real businesses that deliver real innovation. Companies on my private radar include: UK-based Nivaura, led by Avtar Sehra and Marcello Fiori which are looking to power capital market workflows; also, UK-based Transak, led by Sami Start and Yeshu Agarwal which are looking to challenge payment gateways; and, Singapore-based Biconomy, led by Ahmed Al-Balaghi, Sachin Tomar and Aniket Jindal, which are building Web 3.0 apps. Interestingly, Silicon Valley is acting more like a VC these days as technological innovation appears to have shifted to the ‘Global’ Valley.

The opinions expressed in this blog are the author’s own (presented in a non-professional capacity) and do not reflect the view of his employer, its affiliates or of any other professional services provider or organisation whatsoever. The strategies presented are thematic and do not constitute investment advice (or advice of any kind). No assurance can be given that the objectives of the aforementioned investment strategies will be achieved; the strategies involve risk (including, without limitation, illiquidity risk) and may incur loss on some or all capital deployed. The opinions expressed, or indeed the information or assumptions that underpin them, may contain errors, mistakes or omissions; no assurance or warranty can be made as to the accuracy or completeness of this information and readers should not place any reliance on this content for the purposes of executing investment decisions or for any other purpose. In any case, the author reserves the right to change his mind; as his thoughts and opinions may evolve or change to reflect an open mind. Readers accept full responsibility for the use of this content; and are kindly requested to consult with their professional advisor before making any investment decision related to the same.

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