Blockchains are gathering a lot of mainstream attention, especially from enterprises looking to tokenize their data on the immutable ledger. However, we often fail to realize that the hype blockchains are gathering is contained in a small niche of attraction. Placing blockchains side by side with other technologies, like artificial intelligence, for example, we can see that the blockchain hype is fading away. However, even though the hype is dying out, the technology itself continues to grow.
This article will go over the reasons for the decrease in interest in the technology, what might have affected its mass adoption, and what future it might have in the future.
The Rise of Blockchain Technology
Blockchain technology has had a fascinating journey in terms of its conception. Although the foundational concept of a decentralized system based on cryptography traces back to the 1970s and 1980s, it was not until 2008 that blockchain technology saw the light of day. A person or a group of people under the pseudonym of “Satoshi Nakamoto” have published a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”.
The paper introduced the first-ever cryptocurrency Bitcoin with an underlying technology that is the blockchain. It was a matter of time before many people got interested in the decentralized system that may revolutionize how we store and transfer data.
Since blockchains are decentralized and immutable, that means there is no central authority to control which data gets transferred and which doesn’t. It’s a radical shift that may one day overthrow the centralized facilities such as institutional banks.
In no time by the 2010s, Ethereum and decentralized apps (DApps) emerged as blockchain and cryptocurrencies were gaining popularity. By 2017, the blockchain craze began as Bitcoin’s price shot up from $900 to $20,000 throughout the year.
By 2023, blockchains have found their way into industries such as finance, healthcare, supply chain, logistics, governments, and more. With over 271 blockchain-based projects over the decade.
Crypto to Take Over the World
Without the underlying technology of blockchains, there wouldn’t be any cryptocurrencies. However, it’s the latter that harnessed the cheers of the crowd. Cryptocurrencies gained popularity when Bitcoin shot up in price in its first price rally in late 2013 when it reached an all-time high of $1200. This spike garnered widespread media attention and drew more people into the crypto space.
In 2013, the blockchain hype was increasing as many alternative cryptocurrencies (altcoins) surfaced next to Bitcoin, such as Ethereum, Litecoin, and Ripple. The total market capitalization of all cryptocurrencies started to increase significantly. Here we come to the famous year of 2017 as cryptocurrencies experienced a bull run that lead to a rush of investors entering the market.
Bitcoin kept fluctuating between winters and bull runs to reach an all-time high of $60,000 in 2021 after the pandemic, and this is where crypto, NFT, and blockchain hype increased significantly. Many people got into investing in cryptocurrencies and non-fungible tokens (NFTs) during this surge. That is until the blockchain hype faded away by 2023.
Hype Decreases: Blockchain Fatigue
One of the reasons why blockchain hype died down in the last couple of years is that people have exhausted its potential. The overhyped expectations companies have for blockchain technology have been blown out of proportion. For once, many companies view blockchains as the savior of all their problems. As if the blockchain is the only solution for supply chain problems.
However, blockchain technology is still being developed which means that many blockchain-based blockchains would simply not come to fruition. Blockchains are not going to save the world, it’s a fantasy, an illusion. This is known as blockchain fatigue. Blockchain fatigue is a phenomenon where individuals and businesses become weary or disillusioned with the hype and promises surrounding blockchain technology. It’s characterized by a sense that the technology has not delivered on its initial promises. Or that the challenges and complexities associated with its adoption outweigh the benefits.
When people started realizing that the technology is not living up to its initial hype, many bailed on blockchain and considered it to be a failing technology. Even the hype of cryptocurrency died down when there were not that many use cases.
So, why did the blockchain hype fade out into blockchain fatigue?
Reasons for Blockchain’s Hype Decrease
There are many reasons why blockchain hype faded out in the last couple of years. Here are some of the most prominent ones:
- High Expectations: The delusion that the blockchain holds all the solutions for all problems is one of the reasons why the hype went down. In reality, the implementation of blockchain solutions has not been as effective as expected.
- Scalability Issues: With the rise of expectations and adoption comes a spike in challenges. Blockchains suffer from scalability issues where they struggle to handle a large number of transactions at a fast pace. This limitation hindered their adoption in applications requiring high throughput.
- Regulatory Uncertainty: Not understanding the technology clearly has made governments wonder where to place it in regard to regulations. This led to uncertainty and, in some cases, strict regulations that slowed down the adoption of blockchain solutions.
- Complexity: Implementing a blockchain solution can be complex and challenging. It requires technical expertise in cryptography, consensus algorithms, and distributed systems, which not many have.
- Lack of Use Cases: There are many theoretical use cases for blockchains but when it comes to implementation, they fail to deliver. The lack of real-world use cases beyond cryptocurrency has led to skepticism and reduced interest.
- Shift to Other Technologies: Artificial intelligence, machine learning, cloud computing, quantum computing, and many more technologies surfaced that gained media attraction that competed with blockchain technology.
Gartner Hype Cycle for Blockchains
One way to understand how the blockchain hype is doing is by looking at Gartner’s hype cycle for blockchain technology. The Gartner Hype Cycle is a graphical representation and methodology to describe the typical lifecycle that new technologies go through as they gain adoption and maturity.
The Hype Cycle consists of five phases:
- Innovation Trigger: The emergence of new technology.
- Peak of Inflated Expectations: A peak of high expectations and intense hype.
- Trough of Disillusionment: The hype subsides, and technology might not live up to the initial expectations. This phase can lead to skepticism and reduced interest.
- Slope of Enlightenment: During this phase, the technology’s potential becomes more realistic, and organizations start to find value in its applications.
- Plateau of Productivity: The technology reaches a level of maturity where it’s widely adopted and integrated into various industries and applications.
That means that technologies have a life cycle. They start at the innovation trigger and experience a peak of expectation soon after it. This is where we would place the blockchain hype back in 2017. However, as time goes on, blockchains will eventually go down in the phase of Trough of Disillusionment. Which is where we might place the blockchain hype in 2023, aka, blockchain fatigue.
However, Gartner’s Hype Cycle chart indicates that after disillusionment comes enlightenment, which means that technologies continue on their path to mass adoption. By 2022, Gartner has placed cryptocurrencies, decentralized applications (DApps), and wallets on the road to mass adoption.
Blockchain vs. AI: Who Wins the Hype?
One thing people fail to realize is that the blockchain hype wasn’t as big as it seemed to be. Even back in 2017 when the hype for blockchains was at its peak, it wasn’t as big as you’d think. For example, when we compare blockchains with other technologies such as artificial intelligence, we can see that blockchain never gained that much hype in the first place.
However, while AI’s hype seems humongous next to blockchain’s hype, that doesn’t mean that blockchains are not important. While less well known to the general public, blockchains have a strong presence within certain circles, particularly in the tech, finance, and supply chain industries.
Will Blockchain Survive as a Technology?
As we’ve seen in Gartner’s Hype Cycle for blockchains, many concepts are still making their way into mass adoption. Blockchain’s hype may be dying down, but the technology itself continues to evolve and there are still ongoing efforts o address its challenges and explore new use cases. It’s just a matter of time until the network solves blockchain’s scalability issues and companies, one by one, start decentralizing their databases.