You might have heard about it, but Bitcoin is going crazy. There is a number of reasons one can point to for this behavior and, in full disclosure, I own a fraction of a Bitcoin, some Ethereum and a few Litecoins. The issue here is that the industry is going crazy with tech that only select few understand and the talk of a bubble is founded in sound logic mimicking the mortgage backed security derivative behavior of 2006-2010. (To be fair, the market is substantially smaller, about $40bn in market cap vs the roughly $8tn directly risked in the mortgage crisis)

The point here is we don’t know if blockchain and distributed ledgers are truly forming a Blue Ocean ecosystem or a minefield of derivative mechanisms that only a select few understand.

Enter the crazy… There were 44 ICO (initial coin offerings) in 2016 and there is some utility to some of these because of the way they are disrupting traditional fundraising models, however, as is the case with creative destruction, many of them are going to wither on the blockchain vine.

Context: There is enormous power in the concept of blockchain and the distributed ledger, I recommend you read up on them and be sure to read Hernando De Soto’s work on Property Rights.

Quick Example:

• Blockchain transactions for payroll -

  • About 20-30% of a business’ expenses are payroll, payroll is usually conducted via ACH and takes 3-5 business days, for companies that pay every other week, that’s tying up 20-30% of your working capital for about half of the working days in a year.

  • If payroll was transacted via instant transfers, without fees, massive opportunities for that free cash flow could be realized. Employees could even be paid daily, hourly, er… rounded to the nearest quarter-hour?

• The ramifications for this is pretty huge and the idea of being paid instantly for work done, rides the whole spectrum of excellent to terrifying. Work anywhere might be even more seamless and yet the gig-economy maybe only more exploited.

So while blockchain and the distributed ledger have the ability to massively impact almost anywhere that needs two entities to bind, be it the next evolution of the smart grids, music trademark protection, to healthcare, property rights and, of course financial markets.

After all that, is Bitcoin for you? That depends and it is still really early times. The volatility in the market for pricing, the wild speculations that even Jim Cramer couldn’t hold back from by saying that Bitcoin could get as high as $1m, more than likely is totally unrealistic.

My general recommendation is the standard investment mantras of only invest what you can lose, understand what you are investing in, and diversify.

However, for the entrepreneur and other product folks out there, the distributed ledger is real.

As product person, one of the many inputs I add to my product strategy amalgam is the Gartner Hype Cycle. Check it out if you are not familiar, see below.

What it says about blockchain is that it is almost at the apex of the “Peak of Inflated Expectations” and is on a 5-10 year cycle before it emerges out of the “Trough of Disillusionment” and begins a trajectory along the “Slope of Enlightenment”. While Gartner has some really savvy cats researching this, getting caught up in the details isn’t the reason why I put this input in the strategic mix. I put it into the mix because it is a helpful reminder that early adopters have the tendency to overhype and fixate on the technology capabilities, lest we forget that the real market moves when value is delivered to people. Blockchain isn’t there yet, delivering value to people.