While crypto technologies are improving, they have some glaring drawbacks:
- The recent BTC confirmation time (transaction processing duration) was in days[1].
- The consumer loses significant protections because transactions are final.
- On a broader note, no centralized controls or responsible entities means no one to point fingers at when something goes wrong.
- There are very steep learning curves for all participating parties.
These are all being worked on through technology improvements and new blockchains, but they're still issues that prevent blockchains from displacing existing systems. I think they could one day change everything in an Innovator's Dilemma fashion, but not anytime soon (5-20 years). There is already staunch opposition to using clearly superior technologies due to cultural factors, for example:
- Americans won't use chip readers partly because the magnetic strip was already widespread[2].
- Developed nations don't use mobile chat operating systems such as WeChat partly because they already had laptops[3].
So in the case of blockchains, not only is there an overwhelming opposing cultural force, but also they happen to make inroads in sensitive industries such as finance/contracts, and the technology is not superior on many levels. This would make adoption very difficult.
Where it will work
However, some people don't have such great institutions. Look at how successful BTC has been in turmoil-ridden South American nations such as Venezuela and Argentina[3]. The inflation is out of control, and consumers don't trust any of the banks or institutions. In this environment, the blockchain is leaps and bounds better than anything else that these consumers have access to, so it's immensely valuable. You'd be willing to wait several days for transaction clearance. You wouldn't care that the transfer is final. You'll do whatever awkward dance it takes to operate and secure a Bitcoin wallet. There's no better alternative, and financial asset security is important.
I think characteristics of an ideal market for blockchain technology today could be:
- Very low trust among participants.
- No trusted central authority.
- Expensive, long, or nonexistent arbitration cycles.
- High transaction costs.
Its most compelling value is the provision of trust where there is none. An example where this might work well is in the specification and mediation of international contracts for small businesses. There is currently little accountability after getting burned in an international transaction with a small entity, as a small entity. If there were a standard trusted registry of company reputation, transaction histories, and contracts, then it could go a long way to building systems of trust that enable more fluid trade afar.
[1] https://blockchain.info/charts/avg-confirmation-time?timespa...
[2] http://www.digitalcheck.com/emv-will-usa-be-ready/
[3] https://techcrunch.com/2016/06/01/it-might-be-time-to-stop-l...
[4] https://reason.com/archives/2016/11/28/the-secret-dangerous-...