back to article McKinsey’s blockchain warning irks crypto hipsters

Blockchain companies are upset with management consultant McKinsey for pointing out the technology is stubbornly stuck at base camp after years of hype. At the start of the year, McKinsey performed a reverse ferret on the much-hyped technology. Two years ago the expensive management consultant was promoting reckless …

  1. TRT Silver badge

    Is it possible...

    to blockchain a spelling dictionary, so that it's impossible to mistake "where" with "were"? Reports that make sense, using complete sentences and with plain but correct English (other languages are available) lend themselves more credibility by doing so.

  2. Anonymous Coward
    Anonymous Coward

    I recently took part in a Blockchain trial with emusic.com and I think I feel the same way now. Their intention behind it is to "fundamentally change" the music business so that the people making the art are adequately and fairly rewarded, rather than the VCs spunking cash into Spotify et al. Laudable intentions, but even after going through the trial, I can't figure out how it's actually going to work, if at all; it seems that everyone is just shouting Blockchain Blockchain Blockchain and hoping something sticks.

    In terms of the actual process, I had to set up a digital wallet, fill it with currency (provided by them, kindly) then use it to purchase music on their test site. Whilst only a demo, it was a nightmare; clunky, confusing and for what? I've been happily paying for music online with them since 2001 with no bother and, other than this nebulous concept of rewarding the artists more fairly (because Blockchain!) it gave me no benefits and only lots of hassle. If I as a tech found it difficult for no benefit, there's no way anyone less engaged would bother. The infrastructure (tarmaced roads) definitely isn't there yet.

    1. Jason Bloomberg Silver badge

      To be fair that does sound like a shitty implementation rather than evidence blockchain is flawed, though I can't see how using blockchain would benefit artists either.

      I suppose it may depend on where the wallet is held, locally on the user's PC or elsewhere, how the payment transfer and authentication is dealt with, but it shouldn't really be any worse than paying by PayPal, card or any digital means.

      1. Anonymous Coward
        Anonymous Coward

        What's also unclear is how it's demonstrably either *better* or *cheaper* than having a central clearing house (like Paypal) - especially when the chain involves proof-of-work like bitcoin, resulting in costs of $30-$50 per transaction.

        1. Carpet Deal 'em

          The reason for Bitcoin's high transaction isn't the cost of mining, but that only so many transactions can be processed on the same block; with enough people wanting on the blockchain, miners can tell anyone not willing to stump up huge fees to get bent(if they couldn't, the energy spent mining would fall to match demand). This could be resolved by using a larger block size or more frequent block processing, but the latter would completely break the protocol and the Bitcoin developers absolutely refuse to do the former.

      2. Anonymous Coward
        Anonymous Coward

        OP here; not suggesting that Blockchain in and of itself is flawed, but that the implementation here was and that the company was unable to explain clearly what the advantages were for the artists, never mind the customer. As far as I could understand it, it was intended to make payments more traceable and equitable than current forms (Spotify cheques for $0.03 etc) but their whitepaper didn't make it clear how this would actually happen.

        1. Anonymous Coward
          Anonymous Coward

          Well, it could mean a couple of things:

          1. The blockchain is used for recording the transactions, but at the end of the month some "real" money is still transferred to the artist. In that case, there seems to be little advantage of blockchain over, say, a database or log. "This song was played X times, and hence your payment is Y".

          or:

          2. The actual "money" being transferred to the artist is in the form of blockchain credits - à la bitcoin. This has huge problems, one being the massive variability of its value in real terms, and another being the high transaction costs. Neither of these benefits the artist.

          You mention traceability. Were they suggesting that each individual "play" event was stored on a blockchain, where the music player apps themselves participate directly in the blockchain? The cost of electricity alone wipes out any chance of the artist receiving any money; and the massive concurrency (millions of people all playing tracks at the same time) makes consensus almost impossible.

          Surely what you want is: player sends an event to central database, saying "I played this track". Of course, it's possible to game this system by sending fake play events - but you could equally game the system if you were directly adding events to a blockchain. You use standard fraud detection techniques to detect this. The difference is, with a database the fake events can be identified and removed. In the blockchain, they live forever.

  3. Anonymous Coward
    Anonymous Coward

    Peak moth burn?

    I've always been highly sceptical that blockchain had viable applications outside crypto-currencies but I recently read an article giving examples where trustless (or decentralised) trading would be enabled by blockchain. Fair enough, I'm convinced. But that article didn't explain how these non-crypto-currency applications replaced the Proof of Work concept to provide something like access-control. Is that why the article says "It added that blockchain solutions required a dedicated network."? Anyone? Sorry - I'm intrigued... but not enough to go and actually read the damned report.

    I'm quickly coming to love blockchain - it serves two purposes - given the right rules around it, it can offer a trustless immutable ledger. It also draws snake-oil sales-persons like moths to a flame.

    1. 2+2=5 Silver badge

      Re: Peak moth burn?

      I've always been highly sceptical that blockchain had viable applications outside crypto-currencies but I recently read an article giving examples where trustless (or decentralised) trading would be enabled by blockchain. Fair enough, I'm convinced. But that article didn't explain how these non-crypto-currency applications replaced the Proof of Work concept to provide something like access-control. Is that why the article says "It added that blockchain solutions required a dedicated network."? Anyone? Sorry - I'm intrigued... but not enough to go and actually read the damned report.

      I'm quickly coming to love blockchain - it serves two purposes - given the right rules around it, it can offer a trustless immutable ledger. It also draws snake-oil sales-persons like moths to a flame.

      Almost everyone uses the word 'blockchain' as synonym for 'immutable ledger'. It isn't. So when you search to find some article explaining 'blockchain', what you get is an explanation of Bitcoin. And then everybody gets confused. So, ignore the proof of work stuff - that is Bitcoin specific.

      What is a viable use for an immutable ledger?

      Well, a music scenario might be that each record sale (or stream etc) has to be 'signed' by the buyer, the distributor and the artist. That way the artist knows for sure how many sales there have been and so knows whether they are being rewarded as per their contract or not. The buyer knows the artist is being rewarded because the buyer can see that the artist is a signatory to their transaction. The distributor is incentivised to take part because they can promote themselves as fairly rewarding the artists etc. A win-win-win situation.

      (Note that the artist doesn't have to do this personally - a performing rights agency could represent them on their behalf as they do at the moment for traditional sales.)

  4. Anonymous Coward
    Anonymous Coward

    While I'm sceptical of blockchain as of yet,

    I am at least as sceptical of McKinsey.

    1. theblackhand

      Re: While I'm sceptical of blockchain as of yet,

      McKinsey - real, make money for McKinsey, appears to be genuine snake oil, wouldn't spend my own money on them

      Blockchain - real, made money for some people, jury still waiting for snake oil to be produced, wouldn't spend my own money on them

      1. Velv Silver badge
        Terminator

        Re: While I'm sceptical of blockchain as of yet,

        McKinsey - if you're not part of the problem, there's money to be made prolonging the solution

  5. Teiwaz Silver badge

    Blockchain

    It's 2019, and it's still a solution looking for a problem???

    1. Teiwaz Silver badge

      Re: Blockchain

      I think the issue is, that while it'a a solution looking for a problem; it's a very convincing solution.

      ergo, there must be a problem looking for it.

      A desperate to be solved problem, a lucrative and very profitable problem.

      It's not so much follow the money as chase it in this case.

      Bloody Ferengi.....

  6. EricM

    The Emperor's New Clothes ...

    As an engineer I was astonished and frustrated for a long time by the success of the make-believers that claimed blockchain to *somehow* be an universal solution to decentralized data transer.

    The why could never be answered, the how never demonstrated and questions into the matter resulted mainly in hand-waiving and references to 1) no need for centralized infrastructure and 2) my somewhat advanced age ....

    While both observations are true these alone do not make blockchain a viable solution for data transfer in any given context.

    With all due reservations against McKinsey resarch reports - it will be interesting to see what happens, now that the first noteworthy party claims the emperor is naked...

    1. Anonymous Coward
      Anonymous Coward

      Re: The Emperor's New Clothes ...

      The only observation I would add is:

      - if every celebrity and their dog can create a new blockchain indicating little in the way of uniqueness, why would any of the public block chains become a viable alternative to a company/collective/country developing their own blockchain rather than relying on an existing solution?

    2. Jack of Shadows Silver badge

      Re: The Emperor's New Clothes ...

      All things data has long been my "thang." I keep blockchain at the back of my mind hoping some problem will come along for its application. Unusual for such a lag.

  7. Ledswinger Silver badge
    Unhappy

    Why pay Mckinsey?

    When you could have come here years ago for free and been advised that blockchain was a waste of time and effort.

    According to McK, VC funding in 2017 for block chain was a billion dollars. If we assume that as much again was spent by businesses being pressured to evaluate the pointless technology, that's $2bn. Now assume that was high water for the block chain hype merchants, and project some sort of shallow bell curve in prior and subsequent years, and we're looking at around $5-7bn totally wasted.

    Imagine what you could (beneficially) do with over $5bn.

  8. Doctor Syntax Silver badge

    "McKinsey is confused about the reasons blockchain isn't ramping that quickly. Their main reasons are related to ALL digital transformation projects, not just blockchain."

    Would that have something to do with snake-oil?

  9. AGITA018

    I do see a use for immutable ledgers...

    ....but probably only in industries where the probity of the production chain (farm to fork etc.) is a tangible benefit. I those cases the number of parties would be small, potentially only the manufacturer but more likely (in the Farm to Fork scenario) the farmer, transport companies, wholesaler, retailer, packager etc., but still unlikely to get very far into double figures and thereby reducing the impact of performance on very large blockchains. If there is a market for goods with excellent environmental or regulatory credentials (Organic, fair-trade, Child labour free, whatever floats your personal boat) then this seems like a useful tool. For massive scale deployments it's still not quite there IMHO, YMMV

    1. JohnFen Silver badge

      Re: I do see a use for immutable ledgers...

      "For massive scale deployments it's still not quite there IMHO"

      I don't think blockchain will ever be viable for massive scale deployments. It's simply too inefficient on all levels.

  10. lotus49

    Blockchain is the new PKI

    I used to be a consultant at one of the Big 4 firms and one of my areas of specialism was asymmetric key cryptography, Public Key Infrastructures and Trusted Third Parties. It was a fascinating field. It was technically challenging, which I loved and there was a huge number of potential uses.

    Fortunately, I went on to specialise in information security more generally because despite all the hype, PKI never took off in the way that many people (including me) hoped.

    The issue with a lot of crypto technology is that the underlying principles are often elegant and reasonably easy to explain as long as you don't get into the maths. The same could not be said for the implementation. Cryptography is often extremely hard to implement in such a way as not to break anything. The implementation details mattered and in the long run, they were very often a major stumbling block when going from a simple POC to a full implementation.

    Blockchain looks very similar to PKI from where I'm sitting.

  11. The Nazz Silver badge

    Mandatory use.

    Lawyers.

    Would it prevent the following (actual) case :

    Lawyer : "M'lord, here is a letter i sent to the defendant on dd.mm.xxxx"

    M'lord : "Yes, i hear you, but could you please explain why then it differs from the genuine letter that you actually sent to the defendant, as submitted in your bundle one month ago?"

    As with the music industry (wider entertainment industry too?), the basic processes should be tidied up long before any fancy tech should be applied to it.

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