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Business of Blockchain event warns big money to play the long game

If there was one message drilled into the heads of attendees at the Business of Blockchain event co-hosted by the MIT Technology Review and the MIT Media Lab it’s this: Blockchain looks like it could follow the same mind-blowing, world-altering trajectory of the internet.

The only problem is, presenters at the Business of Blockchain event couldn’t quite agree on just where blockchain technology is on the internet timeline. “We’re investing like it’s 1998,” said Joi Ito, director at the MIT Media Lab, which houses the Digital Currency Initiative. “But I think it’s like 1989 in terms of the level of standardizations we have.”

Amber Baldet, who is heading up the blockchain effort at JP Morgan, said Ito’s 1989 marker was actually  optimistic and suggested we rewind the clock another 20 years.

“The joke I make is that we’re actually in ARPANET 1969,” she said, referring to a time when the early packet switching network was barely a network at all — it was just four university computers connected together. “I keep a diagram of ARPANET from 1969 behind my desk because it looks remarkably like the [blockchain] proof of concept and pilot diagram that I have where we’re connecting two banks and one market infrastructure provider.”

Plus, there are key differences between the two technologies — one of the biggest is, to use the conference’s wording, the business of blockchain.

“With the internet, we had a couple of decades where people basically left us alone,” Ito said. “And we could make very non-commercial decisions like the idea of carrying packets for each other. That’s a very hippie move.”

That isn’t the case for blockchain developers. Corporations and venture capitalists are pouring money into blockchain technology and demanding a return on investment. The demand is unprecedented, according to Baldet, and developers have to work at a pace that poses inherent risk. “With what other technology would we consider taking something to production with real money that’s never been tested in a real-world environment before? I mean, nobody picked up databases or relational databases without having seen them in plenty of other contexts first,” she said.

But the internet-blockchain comparison is not without merit. And, as middle school students no doubt learn in their civics and government classes: History has a tendency to repeat itself.

Indeed, one of Ito’s takeaway messages was that attendees consider the lessons learned from the development of the internet. The internet protocols that won the day were often affiliated with academic and government funding, he said. Companies that survived the booms and busts of the World Wide Web kept a pulse on the conversations happening in nonprofit developer communities (such as academia, which often creates the open standards for the private sector) and remained flexible enough to transition as the technology changed.

“So, my advice, if I had it: It’s a long game; you should build expertise, you should spend strategically in building models and ideas, but I think you have to be prepared for quite a bit of change and disruption,” Ito said. “I would pay attention to the open standards and layers where [there are] communities of expertise.”