It goes without saying that blockchain and cryptocurrencies have become hot topics in the worlds of tech and finance. Blockchain has the ability to pervade every area of commerce and every facet of our lives, much like the internet. At this point, entrepreneurs and leaders would be remiss to ignore the opportunities and threats that blockchain technology and cryptocurrencies present.

The best entrepreneurs and leaders face innovation head on. For this reason, I attended Consensus 2018 last month, organized by Coindesk. The event was buzzing with excitement, and people. The attendance was so large that it maxed out the capacities of the venue. The energy, and the feeling of possibility, was palpable.

This article provides a look at the key observations and conclusions I've made from my time at Consensus, and in the weeks since. My hope is to pass this information on to readers who did not get a chance to attend and want to know what's important in blockchain and cryptocurrencies.

And if you didn't get a chance to go this year, you have another opportunity to attend Consensus Singapore in September.

Here's a list of the notable comments, observations and conclusions from Consensus 2018.

1. We're entering the development phase

While investment activity continues to dominate the headlines, Jalak Jobanputra, founder and managing partner of FuturePerfect Ventures, shared that we're starting to shift from pure investment and speculation to development.

She mentioned that there's still a lot that needs to be built out and the acceleration of that development should increase. Many of the projects that raised money now need to focus on building it. The market also needs to look at addressing scalability concerns.

2. Where is the institutional money?

Adam Struck, general partner of Divergence Digital Currency Fund, highlighted another big potential event that many investors and developers are watching: the entrance of institutional funds.

"The main trend we're preparing for is a massive influx of institutional capital entering the space," said Struck. "Global hedge fund assets under management (AUM) is around $3.2 trillion dollars. If approximately 8% of that gets reallocated to cryptocurrencies, it would double the market cap of the entire crypto market."

So what are institutional investors waiting for?

"We speak to some of the top endowments and one of the main reasons they have yet to enter the market is because there is concern around self-custody of assets," said Struck. "We are confident that as more crypto-focused qualified custodians emerge, these massive institutions will feel comfortable allocating sizable portions of their AUM to the asset class."

3. Was the Cryptocurrency bubble that big?

It's an interesting question. Catherine Wood, founder and CEO of ARK Investment Management, LLC., provided some revealing data while comparing the digital currency bubble to the "dot com" bubble.

At its peak, Wood stated that the dot com bubble was responsible for approximately 6% of global GDP. She then noted that at its peak, cryptocurrencies added up to just 0.8% of global GDP.

This means cryptocurrencies only reached around 13.3% of the size of the dot com bubble, based on percentage of global GDP.

4. The industry is in an echo chamber

Much of the language used by projects and individuals did not address the real-world narratives needed for the mass adoption of cryptocurrencies or blockchain.

This is not intended as a judgment. The industry is young. It reminds me of the early days of the Internet of Things industry and how people judged us for focusing on point-solutions instead of connecting the entire home.

I'm confident that the narratives will evolve as the entrepreneurs and leaders understand that they need to expand from the "innovators" to the "early adopters."

In addition, leaders are not doing enough to be inclusive with blockchain, which further exacerbates the existence and effects of the echo chamber. Nyla Rodgers, founder of the Satoshi is Female movement, highlighted this dynamic while speaking on a riveting panel at the Crypto House, a gathering of experts and influencers in cryptocurrencies and blockchain that was organized independently of Coindesk's Consensus 2018.

Rodgers stressed the need, and potential, for the blockchain community to be inclusive of everyone and not concentrated around the tech elite and patriarchy that withholds knowledge, access and participation. 

5. The frenzy stage isn't bad...it's necessary

Over the last twelve months, we've experienced a frenzy stage in investment in digital currencies. This period was dominated by rapid price appreciation due to speculation and hype.

While it can be dangerous for investors, this exuberance is helpful to the overall life cycle of the industry because it attracts the capital and talent to enable the opportunities that the blockchain provides. Just like internet bubble spending left behind infrastructure and real technology, this boom will leave behind the foundation for the next wave of blockchain and digital currency growth.

Final Word

This nascent industry is moving fast. It's important to educate yourself and stay on top of the news. Learn what cryptocurrencies are and what the blockchain actually is. You'll also want to keep a close eye on the news, regulations, risks and ongoing developments in the space.

When you consider the underlining technology, there's little doubt in my mind that blockchain will disrupt nearly every industry - just like the internet did over the last 25 to 30 years. You want to be ready.

Published on: Jul 12, 2018