Peak of Inflated Expectations - Distributed Ledgers
Posted: Thu Jan 23, 2025 4:46 am
With five to ten years to go before reaching plateau, distributed ledger technology is at the peak of inflated expectations.
Distributed ledgers are the foundation of the blockchain, containing information about all transactions that have occurred on the chain. In many ways, distributed ledgers are similar to traditional databases, with a few key differences.
The biggest difference is that distributed ledgers do not have a single location where they reside. Each participant in the blockchain has a copy of the ledger.
There's also a big difference in how data is added to the ledger. Instead of one single source of truth that everyone copies, each participant decides the truth for themselves. Participants then vote - all automated and computational - and only add information if there's a majority consensus.
The beauty of this system is twofold.
First, there is no single place where all important information self employed database is stored, eliminating any dependence on a single provider or service.
Second, no one relies on a provider that could theoretically change history by altering records. This allows each participant to trust that the data they store is a true representation of what happened.
Gartner sees distributed ledgers as promising but far from being implemented. Right now, there are challenges associated with scaling private distributed ledgers, and the value of ledgers compared to existing technologies is still unclear.
Gartner expects that over the next decade, distributed ledger technology will begin to converge into a unified style. Just as accounting software competitors manage records, storage, and integration in the same way, ledger features and security will begin to look the same.
Do:
Plan, plan, plan. Having a clear understanding of the benefits and challenges of distributed ledger technology is a great place to start. From there, you can create a list of your business needs, allowing you to quickly evaluate new accounting technologies as they hit the market.
Start working with existing ledger technology to see how it can make your business run smoother or give users more control without sacrificing efficiency. Distributed ledgers have big benefits for financial companies and the businesses they serve. See if your business can benefit.
Well of Disappointment - Bitcoin
Bitcoin. At the time of writing, Bitcoin is valued at just over $7,000, giving the currency a market cap of $117.6 billion. To put this into perspective, Bitcoin started the year at around $1,025, with a peak price of $16.5 billion.
The currency's rise in 2017 was largely driven by speculative investment , although demand for Bitcoin as a currency is also growing.
According to Gartner, Bitcoin goes through the hype cycle in two ways.
Bitcoin as a currency cycle is in a period of disappointment; it is growing slowly and accounts for only a small portion of all financial transactions. The second cycle - Bitcoin as a speculative investment vehicle - is approaching the peak of inflated expectations.
Cycles exist simultaneously because the currency serves two different functions. In terms of Bitcoin as a currency, we see new entrants, making it difficult to determine the value of Bitcoin as a currency. While it may remain the most popular cryptocurrency in the world, there are other proposals that could surpass it.
Technologists and observers are more interested in the underlying blockchain technology than the currency itself, which currently appears to have limited real-world use.
Along the way, the struggle with speed and scale has made it easier for other currencies with clear value propositions to enter the market, even if those values turn out to be disappointing.
Do:
Bitcoin may still be a very valuable currency due to its lack of reliance on external currencies for value and its unchangeable transaction history. Companies with customer bases in certain areas or among certain social groups may find that accepting Bitcoin is easier than dealing with fees and exchange procedures. Your first step is to determine whether Bitcoin fits your customers' needs and histories.
Don't bet your farm on Bitcoin. Since it's largely a speculative play, expect Bitcoin's value in USD to continue to fluctuate wildly. If your business needs X amount of cash reserves, storing it in Bitcoin could be bad news if prices drop quickly.
Other points of the hype cycle
These are just three of the nearly 20 technologies in the blockchain Hype Cycle. What other trends do you think should be covered? Let me know in the comments, and we can dive deeper into these issues in a later article.
I'm also interested in whether any of these technologies are emerging in your business and whether you have plans to eliminate them in the next five years.
Looking for accounting software? Check out Platforms' list of the best accounting software solutions .
Distributed ledgers are the foundation of the blockchain, containing information about all transactions that have occurred on the chain. In many ways, distributed ledgers are similar to traditional databases, with a few key differences.
The biggest difference is that distributed ledgers do not have a single location where they reside. Each participant in the blockchain has a copy of the ledger.
There's also a big difference in how data is added to the ledger. Instead of one single source of truth that everyone copies, each participant decides the truth for themselves. Participants then vote - all automated and computational - and only add information if there's a majority consensus.
The beauty of this system is twofold.
First, there is no single place where all important information self employed database is stored, eliminating any dependence on a single provider or service.
Second, no one relies on a provider that could theoretically change history by altering records. This allows each participant to trust that the data they store is a true representation of what happened.
Gartner sees distributed ledgers as promising but far from being implemented. Right now, there are challenges associated with scaling private distributed ledgers, and the value of ledgers compared to existing technologies is still unclear.
Gartner expects that over the next decade, distributed ledger technology will begin to converge into a unified style. Just as accounting software competitors manage records, storage, and integration in the same way, ledger features and security will begin to look the same.
Do:
Plan, plan, plan. Having a clear understanding of the benefits and challenges of distributed ledger technology is a great place to start. From there, you can create a list of your business needs, allowing you to quickly evaluate new accounting technologies as they hit the market.
Start working with existing ledger technology to see how it can make your business run smoother or give users more control without sacrificing efficiency. Distributed ledgers have big benefits for financial companies and the businesses they serve. See if your business can benefit.
Well of Disappointment - Bitcoin
Bitcoin. At the time of writing, Bitcoin is valued at just over $7,000, giving the currency a market cap of $117.6 billion. To put this into perspective, Bitcoin started the year at around $1,025, with a peak price of $16.5 billion.
The currency's rise in 2017 was largely driven by speculative investment , although demand for Bitcoin as a currency is also growing.
According to Gartner, Bitcoin goes through the hype cycle in two ways.
Bitcoin as a currency cycle is in a period of disappointment; it is growing slowly and accounts for only a small portion of all financial transactions. The second cycle - Bitcoin as a speculative investment vehicle - is approaching the peak of inflated expectations.
Cycles exist simultaneously because the currency serves two different functions. In terms of Bitcoin as a currency, we see new entrants, making it difficult to determine the value of Bitcoin as a currency. While it may remain the most popular cryptocurrency in the world, there are other proposals that could surpass it.
Technologists and observers are more interested in the underlying blockchain technology than the currency itself, which currently appears to have limited real-world use.
Along the way, the struggle with speed and scale has made it easier for other currencies with clear value propositions to enter the market, even if those values turn out to be disappointing.
Do:
Bitcoin may still be a very valuable currency due to its lack of reliance on external currencies for value and its unchangeable transaction history. Companies with customer bases in certain areas or among certain social groups may find that accepting Bitcoin is easier than dealing with fees and exchange procedures. Your first step is to determine whether Bitcoin fits your customers' needs and histories.
Don't bet your farm on Bitcoin. Since it's largely a speculative play, expect Bitcoin's value in USD to continue to fluctuate wildly. If your business needs X amount of cash reserves, storing it in Bitcoin could be bad news if prices drop quickly.
Other points of the hype cycle
These are just three of the nearly 20 technologies in the blockchain Hype Cycle. What other trends do you think should be covered? Let me know in the comments, and we can dive deeper into these issues in a later article.
I'm also interested in whether any of these technologies are emerging in your business and whether you have plans to eliminate them in the next five years.
Looking for accounting software? Check out Platforms' list of the best accounting software solutions .