Can Blockchain Actually Disrupt?
These days, new streaming services pop up like forest mushrooms after a warm summer rain. The contagious example of Netflix prompted others to run their own media empires. There are now streaming services by Amazon, Disney, Apple, NFL, and CBS. In music, there are Spotify, Apple Music, and Google Music. It seems everyone is trying to jump aboard the streaming wagon. And as we wait for the inevitable emergence of streaming services by Pizza Hut and 7-Eleven, it might be the right time to think where it all is headed.
The abundance of streaming services that offer different content is likely to boost piracy. No reasonable human being would subscribe to all of them just for the sake of watching one or two shows that others lack. It’s way more likely that the reasonable human being would find a way to watch it all for no charge, using torrents or other file sharing solutions. On top of that, there are legal limitations related to licensing content around the world that make people from Europe ineligible to watch the same stuff their peers can easily access in the U.S. As a resident of Europe, I know that very well from my own experience. If you travel a lot, you also might have noticed that the selection of available movies and TV shows on Netflix drastically varies depending on your location.
Most people, however, don’t mind paying for content if they have an easy way to do it. But when they cannot legally access the content they want, they usually opt for piracy. Thus, corporate greed and copyright red tape promote piracy around the world. And something tells me that if there was a streaming service that legally offers you to watch anything you want, it would top Netflix in terms of the number of subscribers in a matter of days.
So, the question is whether blockchain can enable such a hypothetical service. And, in my opinion, the answer is yes technologically and no financially.
Let’s take a look: the aggregate market cap of all cryptocurrencies has recently exceeded $300 billion. It seems like a hell load of money until you find out that the Walt Disney Corporation alone is worth $200 billion. And, as we all know, even though it has been buying out its competitors like crazy, it still is not the only media corporation out there. The entire entertainment market’s capitalization is estimated at around $2.6 trillion, so the crypto-market has to grow tenfold just to be on equal terms with the entertainment.
On top of that, most crypto-focused projects don’t deal with entertainment whatsoever: instead, they focus on financial technologies, DeFi, and other niche products. In order to offer a viable decentralized alternative to the existing centralized ones, it has to grow way more than ten times. The exact estimation here is hardly possible but if we assume that blockchain-powered entertainment would take the same market share as the existing solutions against the global GDP, it would have to account for at least 2.5% of the entire decentralized ecosystem. Given that 2.5% correspond to $2.6 trillion, it is not hard to calculate that the entire blockchain industry would have to be worth around $100 trillion.
For reference, the GDP of the U.S. is around $21 trillion. The global GDP in 2014 was around $78 trillion. So, in order to offer a viable alternative to centralized entertainment solutions, the blockchain industry would have to outgrow the global economy. While quantum physics suggests that there is no such event whose probability would be zero, this particular probability does not seem any likely, at least not within the next decades.
The sad truth is that the same applies to literally any other industry, be it finance, logistics, or real estate. I chose entertainment solely because we all like to have fun every now and then, and as an art creator it’s much closer to my mind than real estate.
Even though my calculations are very tentative and should not be construed as any sort of research, they still show that the crypto-industry has to expand a lot to become an influential part of the world economy. Whatever the ICO proponents preached back in 2017 about their solutions disrupting industries like the aliens do buildings in Independence Day, the day of disruption will not come anytime soon.
In fact, the blockchain industry is the one that still desperately requires some disruption. Its potential is still untapped, and its scope of applications is yet to be duly explored. It sure would be nice to have a decentralized Netflix where you can find literally any movie or TV show in the world and watch them legally or a decentralized Google or Facebook that do not eavesdrop on you while you watch porn in the dead of a glooming night in a lonesome October. But for now, it’s just a utopia and the solutions to the obvious crisis of trust and greed in the entertainment and IT industries probably lie elsewhere. Considering there are any.
Something obviously needs to change. But we either don’t know how to make it or don’t have enough money.
Written by Jenny Aysgarth, forklog.media editor-in-chief
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