Bitcoin and blockchain were the topics of discussion at Davos Economic Forum this week. Top investors speculated that Bitcoin could be facing a significant plummet in price this year, even more after the dramatic fall from record highs in 2017. During a debate at the forum, Jeff Schumacher, founder of BCG Digital Ventures, said, “I do believe it will go to zero. I think it’s a great technology but I don’t believe it’s a currency. It’s not based on anything.”
Schumacher, as well as other panelists including 500 Startups Partner Edith Yeung, and Brad Garlinghouse, CEO of Ripple, stated that the focus for him as an investor is on the blockchain technology underlying cryptocurrency. Glenn Hutchins, founder of Silver Lake Partners stated that he too is more interested in the technology than the cryptocurrency itself. “I am much less interested in investing around bitcoin as a currency unit or a currency equivalent, or even the blockchain as an accounting ledger,” said Hutchins, “I am thinking much more about the protocols. In other words, what is the underlying protocol going to do as a consequence of which, which tokens are valuable or not.”
Schumacher and Garlinghouse differed on their estimates for widespread blockchain adoption, but Hutchins said timing shouldn’t be the focus as consumers don’t really care what technology the running a product, just that the product is good. “When you send an email out today, you don’t think about the underlying technology you are using … So you can hear us talk about … what protocol, what token, what technology solutions, how many transactions per second, but eventually what’s going to happen is you are going to put something of value in, something of value will come out the other side and you are not going to care what the underlying technology is,” Hutchins said.
The blockchain underlying Bitcoin is a decentralized public ledger of activity, meaning that it is maintained by a network of individuals rather than a single person. The network utilizes specialized computers to solve complex cryptographic, unfortunately at the cost of slow transaction times. “Open decentralized systems” are the next generation of blockchain technology currently being developed, with comparisons to cloud business applications.