It’s been an interesting year for technology watchers interested in blockchain. From last year’s height of almost $20,000, Bitcoin has fallen to around $6500 showing that the gold rush is finally quieting down. The same has been happening with other cryptocurrencies. Initial coin offerings (ICO) which were used by many blockchain companies as a way of easy fundraising are also showing signs of a cool down.
At this year’s SWiTCH (Singapore Week of Innovation and Technology), enthusiasm for blockchain technology was still high but also down to earth.
“While it’s all nice and glittery at the moment, all this hype will eventually die down a bit and the companies that have focused on the technology will come to the main stage,” said blockchain company DATAVLT co-founder Michelle Yeo. DATAVLT is a data analytics company that uses blockchain to secure data and lower costs.
Yeo talked about the uses of blockchain technology at TechNode’s ORIGIN Disrupt stage on September 17 alongside Ng Yiming, partner at Southeast Asian venture capital TRIVE Ventures. TRIVE invests in blockchain companies along with other industries.
According to Ng, the dying crypto craze is a good sign for the market. Previously, companies would write a white paper, have an ICO, and then think about the product. Many founders have dropped their white paper project altogether after raising millions of dollars through ICOs.
Today, we are seeing blockchain companies returning to the more traditional way of startup development by creating a product and then seeking financing, said Ng. Institutional investors are becoming more important in this process.
It’s not just the funding that is changing. Investors are becoming more skeptical about the limits of blockchain technology.
“Not everything has to be on blockchain and that’s what been happening over the last period—everyone has been trying to put everything on the blockchain,” said Ng, adding that from a VC investors point of view, the more important aspect is where blockchain technology will go in the next five years.
And blockchain does have some interesting applications. While it sounds less sexy than disrupting entire industries (which many have promised but have yet to deliver), blockchain solutions are already being applied to existing ecosystems.
The big institutions, banks, and large companies are not going to change the way they work just because a new technology is here, according to Yeo. Some of the biggest potentials of blockchain is shortening different processes and making them more efficient. This can include many industries from supply chain to manufacturing to hospitality and more.
“One of the key challenges all industries face is actually the overhaul of the whole process: it’s not like you can just put a blockchain and that’s it,” said Yeo.
Ng agreed that blockchain is more about cost savings than making a profit. TRIVE Ventures have for example invested in VeChain, a Chinese blockchain company that is trying to solve supply chain issues including authenticating genuine products, something that is posing a great challenge for luxury brands in China.