A Blockchain Rallying Cry: Free The Hostages!

Blockchain Growth Driven By Tech Obsolescence. Many Organizations Held Captive By Legacy Technology May Be Set Free By Blockchain

For those seeking a rationale for making an allocation to blockchain and cryptocurrency technology, the simplest argument may be this: it’s an “idiosyncratic” growth story.

That is, the secular forces driving growth in blockchain—like the secular forces that drove internet growth before it—are endemic to the technology and independent of ebbs and flows of the business cycle. Therefore, I believe blockchain’s growth can, and will, persist independent of what’s happening in the economy overall. Adoption will continue apace, in my view, because blockchain is supplanting outmoded technology infrastructure that, in many cases, is in desperate need of replacement.

Consider just one use case and you will see what I mean:

In America’s banking industry, 43% of mainframe systems run on a programming language called COBOL, which was invented in the 1950s as a data processing program by the Department of Defense. This antiquated language handles 80% of in-person banking transactions and 95% of ATM swipes. According to an article in Computer World magazine, Bank of New York Mellon (BK) alone is operating 112,500 separate COBOL programs, with 343 million lines of code.

A recent Reuters report estimated that there are 220 billion lines of COBOL in use today across almost every major sector of the economy. And yet, the average age of expert COBOL programmers is between 45 and 55 years old—about 10 years away from a mass migration into retirement. The banking industry, among others, is hard-pressed to find people who can program in COBOL, assuming that their systems are even stable enough to handle changes to the code. Many such systems are so old and inflexible that the coding has to be left completely alone, lest the entire system collapse.

A recent Computer World survey of IT professionals found that while COBOL is still running on many corporate mainframes (because of its superior batch processing speeds), IT professionals view it as an inferior, outdated language that is increasingly irrelevant in an age of non-mainframe computing.