Three challenges facing blockchain technology
Nearly five years ago, Overstock.com became the first major retailer to accept bitcoin as a form of payment. It now accepts many top cryptocurrencies. As a member of the senior executive team and board of directors at Overstock.com, I had a front-row seat to those decisions.
It didn’t take long for the Overstock team to realize that bitcoin’s underlying blockchain technology held great promise beyond cryptocurrencies. We also knew that for blockchain technology to reach its full potential, the startup companies advancing its use would need both financial and human capital support.
Overstock set up a venture capital blockchain incubator, Medici Ventures, to do just that.
We believe blockchain technology will eventually impact many industries. We are already involved in promising developments in areas like capital markets, money transmission and banking, voting, supply chain, property and self-sovereign identity. But there is still a long way to go before blockchain technology can realize its true potential.
Here are the three most important challenges facing more widespread adoption of blockchain technology right now.
The world has become so reliant on computers, to the point where virtually every company now has need for software development. In this environment, where demand grows exponentially, good software development talent is hard to find. Game-changing talent is rarer still.
Because blockchain is a new field of technology, there are fewer talented enterprise-level software developers who understand it well. Those who do can practically write their own tickets. While this is an enviable position for them, it limits many companies from developing engaging and transformative blockchain-based applications.
At Medici Ventures, we provide regular internal training to help our software developers climb this important learning curve. In this training — which we do in educational presentations which sometimes include accelerated coursework — our teams often present discoveries made when developing on one project, with the hope that the solutions may benefit those working on other projects. This approach lets us cross-pollinate our industries and our disciplines, so creative development and innovation become rising tides rather than isolated spikes.
The time spent learning is well worth it; it is why many of our portfolio companies rely not just on our venture capital, but also our human capital. Until there is a regular pipeline of well-qualified blockchain developers, the shortage of great talent will continue to be a struggle for the advancement of the technology.
Like many of their voting constituents, Congress and state legislatures are just becoming aware of blockchain. In some ways, this is good news: Political engagement will increase awareness and interest for utilizing blockchain technology and help drive adoption of these new ideas. Unfortunately, it also brings the temptation of regulation to an emerging market.
I get concerned when regulators and legislators get a whiff of any kind of technological development because they are tempted to regulate it. When U.S. Securities and Exchange Commission (SEC) chair Jay Clayton stated that he considered all initial coin offerings (ICOs) to be securities rather than commodities, and therefore subject to his organization’s regulation, Clayton brought an ICO boom to a screeching halt.
