The Promise, Challenges, and Evolution of The Blockchain Industry

The Promise, Challenges, and Evolution of The Blockchain Industry

For years, technology visionaries have proclaimed that blockchain will bring change to the world through increased decentralization, transparency, and efficiency. These ideas brought many passionate people into the industry. However, as the community continued to grow the underlying motivations shifted from passion to money, and from long-term goals to short-term opportunities.

The blockchain industry has yet to produce the results everyone expected and now, due to the long bear market, this reality is starting to sink in. To push the industry forward, we have to get back to our roots: developing the underlying blockchain-technology infrastructure.

State Of The Industry

In the early days of Bitcoin, everyone was extremely enthusiastic about the long-term potential and promises of the technology. The community was humble and tech-focused. However, due to the ICO frenzy, much of the blockchain industry has placed more emphasis on price and speculation than on innovation and results.

New projects, one after another, entered the scene with an ambitious vision and a glorious whitepaper. Simultaneously, the projects’ hype brought in a bigger crowd that was not as tech savvy as the industry’s predecessors. As a result, blockchain enthusiasts suffered from inflated expectations and short-sighted thinking.

In order to move fast and seize the opportunity, projects spent time and money on marketing. However, these projects were not marketing a working technology, nor a viable product – but rather they were marketing only an idea and vision. In many cases, the project teams began development only after the money was raised.

The whole industry has been suffering from the fear of missing out (FOMO):

  1. New projects have been starting as fast as possible to seize the opportunity.
  2. Investors have been funding projects in order to not miss out on potential gains.

After each successful ICO, the investors placed pressure on the project’s team to perform. The marketing activities had to be sustained in order to support the token price. A project would be quickly deemed a failure if the token price plunged and trading volume dried up, regardless of its technological prospects.

In result, the blockchain industry faces major challenges that can be summed up as follows:

  1. Short-sighted thinking. Projects burn through their capital without delivering. Most money is spent on marketing and expansion, even with no working product, in order to satisfy short-term goals.
  2. Pay-to-play culture. The ICO frenzy brought in a culture where projects receive coverage only by paying for it. As a result, the few projects who do bring in actual innovation stay in the shadows.
  3. Market-follower mentality. The new projects need to get into the ICO phase as fast as possible, which means they settle for being a technology follower rather than a pioneer.
  4. Immature blockchain architecture. The industry is still not ready for a mainstream adoption phase and blockchain is still very experimental technology. There is a big gap to be filled before we can see consumer products and enterprise adoption.
  5. Limited blockchain knowledge. It pains us to say it, but when it comes to blockchain technology, many people have a limited understanding— even if they are a running a blockchain project of their own.

The underlying blockchain architecture and technology hasn’t been able to empower mainstream developers, and businesses are still struggling to find practical ways to get started with blockchain. Yet the hype is still ramping up, and thus everyone is eager to start building even before the foundations are properly laid down.

Evolution of The Industry

The industry’s focus is starting to shift back towards technology.

Even today, it is common that a project is able to build a lot of hype without a working product, but we expect this trend to decrease as the industry matures. The more the industry starts to deliver, the more critically investors and community members will look at projects who aren’t delivering.

Thus far, the main innovations have happened on the lower architectural level, and the higher-level applications need a mature lower level before they can become consumer-centric products. Once we breakthrough beyond this crucial point, technology adoption will rapidly accelerate and blockchain will take the world by storm.

In spite of the numerous innovations of the lower architectural level, there are still major challenges that the industry must address.

  1. Shared-Blockchain Architecture. The single-chain platform model is still dominant, and this forces multiple projects to build on the same infrastructure. As such, it is a flawed design. It does not scale and it leads to “the tragedy of commons.”
  2. Vulnerable Blockchains. Most blockchains are vulnerable, even if they use the most trusted Proof of Work consensus algorithm. In general, the lower the market cap, the cheaper the cost to conduct a 51% attack.
  3. Smart-Contract Design. Smart contracts are often considered the holy grail of blockchain, and no one has dared to challenge this concept. However, as an industry we must acknowledge that there are still many challenges left unsolved in smart-contract technology.

The limitations of the current smart-contract technology are becoming more and more evident. Even the creators of solidity were susceptible to their own coding errors in the “DAO attack,” where 3.6 million Ether were hacked. Indeed, Solidity smart-contract code is difficult to assess, and auditing and fixing security flaws  can take anywhere from a little time, to a lot.

An example of the limitations of smart-contract technology is the popular CryptoKitties game, which is clogging up the entire Ethereum network. The intrusive nature of this highly active smart contract reveals clear scalability issues on the architectural level.

There is a high chance that we have to rethink the entire architecture of blockchains and smart contracts. Looking back, the blockchain industry is evolving at a rapid speed, and so we can almost assume that the hottest thing today will become obsolete tomorrow.

The Market Challengers

To understand the future, we have to follow the market leaders, as well as those who are looking to take their place — in other words, the market challengers. Those who are able to continuously innovate will eventually become the leaders that everyone else trusts and admires.

If the currently recognized market leaders stop innovating, it is just a matter of time before a new player takes their place. That is crucial to understand, as those are the projects who are going to push our industry forward. Overall, the blockchain industry places too much emphasis on a few established players, and not enough on the potential challengers.

What does it take to become a market leader?

A market leader has to develop new technology, bundle it into a product offering, and educate the market about it. This is a difficult path to forge. A market follower, on the other hand, can easily wait for the right time to “go in for the kill.” He bides his time and copies the successful innovations from the market leaders, and later incorporates them into their own product offering.

Being a market follower may sometimes be a sound strategy, especially in mature markets. However, the blockchain industry is far from maturity. Still, there are many opportunistic projects who keenly follow the latest technology trends in order to cut and paste the best available innovations into a new state-of-the-art product.

There is one problem though— these followers don’t have the ability to keep innovating on their own. For them to keep up with the progress of the industry, they need to continue leveraging other projects’ innovations or else they will inevitably fall behind. In other words, most of the industry will always follow in the footsteps of the currently dominating market leader, until one day another player takes their place with yet another wave of innovation.

While it is good to be first on the market and to take the market-leader position, it might bite you down the road if your technology and product offering isn’t fully ready for mass adoption. That has been the case with Komodo before, and that is why there hasn’t been a systematic strategy and effort to push us to the top. In fact, one of our biggest fears was that we would get too much recognition too fast, before we were truly ready for it.

Evolution of Komodo

As a blockchain platform pioneer, we at Komodo recognize our responsibility to empower developers and businesses with new technological capabilities. Thus our objective is to become a recognized market leader and steer the industry back on the right track.

In years past, Komodo's innovations have gone largely unnoticed. Today, Komodo is working diligently to change that. Indeed, Komodo technology has come a long way since its ICO in late 2016. Even today, not many people grasp the potential of our technology. Komodo has carried a stigma of being complicated, hard to understand, lacking marketing and focus. However, all of that is now changing.

Komodo has long roots in technological innovation and experimentation, and we have made continuous advancements for several years. When reflecting upon all of the development, even the Komodo team is shocked at how much things have changed.

We are evolving in all aspects, and this year we are ready to showcase the power of Komodo to the whole industry, and that is why we have to rebrand.

  • Evolution of Komodo’s Technology — Virtually every blockchain platform uses a single, shared-blockchain model. As the limitations of this model are becoming widely understood, the blockchain industry is shifting towards a multi-chain platform architecture. Komodo pioneered this innovative model and continues to lead the industry in this regard.
  • Evolution of Komodo’s Ecosystem — Although practically every blockchain platform is open source, many of them operate like a closed proprietary platform. Gas fees and vendor lock-in make most blockchain platforms unattractive for developers and businesses. Komodo, on the other hand, is a completely open ecosystem that creates a startup and business-friendly environment.
  • Evolution of Komodo’s Marketing — Blockchain is a complex emerging technology. Komodo, as one of the most innovative and fastest-moving projects in the industry, is constantly evolving. To stay in pace with the development progress, the marketing team has had to make several adjustments in the way that Komodo is described. With a full rebrand underway, the Komodo marketing journey is pressing forward.
  • Evolution of Komodo’s Organization — The roots of Komodo go back to a loosely organized group of crypto enthusiasts and community members. Today, the organization maintains a more formal structure, with a vision to become an agile organization. Still, we are true to our roots, and we value holistic management practices and thrive to maintain an open and innovative working environment.

We are confident in our backend technology and in the products we are about to roll out. Together with the developer community we are able to move the blockchain industry forward and bring in the true blockchain revolution.

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