A View on the Blockchain / DLT Stack

I received much feedback on my recent writings focused on emerging technologies especially on Fed’s paper on DLT, strategic thinking on emerging tech, and blockchain for non-technologists.  

As 2016 comes to an end, I want to share my view on the blockchain / distributed ledger world. While there are still a lot of noises out there, this world has become a bit more clear on who is who and who is where (at least for now) in the tech stack.

For any enterprise deep in exploring and evaluating this technology or for any enterprise that has just begun to pay attention to the space, here is one view of the world that I have created to guide my own thinking about the space and how various players position themselves relative to others. (welcome your feedback on the stack)

This is by no means an exhaustive landscape as there are hundreds of startups in the space and many existing technology companies are building out capabilities and solutions. Certainly, there can be more granular view such as a payment stack or a trade finance stack. 

Overview of the stack

Bottom of the stack --- the infrastructure software providers. Key to success for these players is to get as many companies creating DApps to build on their cloud and “blockchain-as-a-service” infrastructures. It’s not surprising that big tech companies are chasing after this space, building out the ecosystem and partnerships to quickly gain mind share and market share.  

The next three parts of the stack --- DL Fabric Platform, DL Software & Services, and Applications --- are more interesting. To me, this is where most actions, innovation and noise are.

The fundamental fabric players, from public to private, are focused on how to build better protocols, consensus, scalability, and privacy capabilities. Similar to the bottom of the stack, key to success is to drive most adoption across developer and startup community from the beginning and to have the ability to iterate rapidly to truly support the community, whether this is demonstrated through more rigorous development environment, tool kits, and/or community governance.

DL Software and Services layer includes players that are building value-add software (e.g., middleware, business logic, workflow, analytics, etc) and services (e.g, consulting, implementation, etc) on top of a fabric to bring distributed ledger to enterprises, generally with some industry and/or domain focus (so far). Most players here are focused on private or permissioned distributed ledgers (centrally managed private peer-to-peer distributed network).

Application layer includes players that are building web and or mobile-based apps adopting certain attributes underpinning the blockchain technology. The distinction between this layer and DL Software and Services is becoming blurry, and some players are positioned in both. 

As discussed before, the DApps need to have real-world data to be useful. This is where data providers with smart contract integration and oracle capabilities play. 

Onward to 2017

The stack is not mature but evolving quickly. There will be convergence and acqui-hires. Bifurcation between potential winners and losers will start to form – partly driven by real use-case adoption as well as available cash-on-hand to ride with the market adoption curve.

Expect more open sourced software at the fabric level. But open source is not the end of the game. 

Startups need to know where they are in the stack and whether they have a strategy to sustain to become one of the more compelling players in the stack.  

Execution is key. Year of 2016 is learning. And the year of 2017 is to extend and scale proof-of-concepts and demonstrate discipline, rigor, and monetization.  

Investors have placed good number of small bets in 2016. It will be interesting to see how investment thesis in the space shifts in 2017.