Distributed Lab Co-founder Pavel Kravchenko Says Blockchain Hype Is Cooling Down

News and Analysis

Distributed Lab’s co-founder, Dr. Pavel Kravchenko says that the interest for blockchain technology is gradually fading, and we may expect mass extinction of blockchain startups any moment now.

As he wrote in a blog post on Steemit, big businesses aren’t ready to use blockchain, as it entails expensive modernization of IT infrastructure and implementation of new security policies. Additionally, blockchain is associated with cryptocurrency and decentralization, which drives the entire matter into the political realm.

In case bankers dare to use blockchain Kravchenko suggests, they have to spend enormous sums of money only to eventually find out that blockchain does what is already being done by existing departments, like legal, logistics, and IT.

Another problem, argues Kravchenko, is the need to monetize the technology originally presented as totally free-of-charge and requiring no intermediaries. Kravchenko sees the solution in creating a completely open financial network being a set of protocols and tools enabling creation and remittance of payments. Instead of sending actual money, the system will just change numbers in databases.

Smart contracts are another side to the problem. Usually, Kravchenko muses, smart contacts we usually talk about now aren’t smart at all, as they don’t control actual assets. Kravchenko believes, it would require to digitize the assets, and legalize them in the first place. Additionally, if someone offers a big corporation to create smart contracts on a public blockchain, its lawyers will be just terrified, as there is no regulatory framework for decentralized contracts.

However, Kravchenko added, the aforementioned doesn’t imply that the blockchain era is over. Everyone involved in the technology just has to comply with several simple rules outlined by Kravchenko:

  1. Prove that blockchain works with real use-cases that touch traditional finance. People need time to realize it is a reliable thing 🙂
  2. Digitize assets via building government registries, core banking systems, stock exchange software etc.
  3. Build cross relationships that require the same APIs (essentially make it happen for code to manage private keys and execute transactions between institutions) — you’ve got financial intranet!
  4. Scale infrastructure — build financial internet — that’s where real value comes from.

Distributed Lab is actively involved in implementing blockchain technology in Ukraine. In particular, the company’s team was developing software solutions for eAuction 3.0, a platform for privatization of public property.

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