Executive Summary:

A blockchain taxonomy for investors. Blockchain technology is being used in a growing diversity of applications, offering a complex array of investment opportunities. While the technology is so new that any investment in it is speculative, patterns of use are emerging. In this report, we propose a taxonomy to enable investors to more quickly and effectively understand individual blockchain applications’ key attributes and to assess how blockchain technology will be used in the near and medium term. To illustrate use of the taxonomy, we apply the indicators to several blockchain applications that range in investment, purpose, and launch date, including Bitcoin, EOS, Tezos, Ethereum and Provenance.

Figure 1: Blockchain taxonomySource: Cornerstone Capital Group

What does the taxonomy tell us?

  • We find that recent blockchain applications are shifting blockchain’s original structural and philosophic pillars (i.e., ex-ante rule setting and radical transparency) toward applications with flexible governance structures and private access. Many applications broadly align with the original blockchain application, Bitcoin, but deviate on one or two indicators to address some potential user need.
  • Current blockchain applications are focused on expert users, which suggests that blockchain remains a product for technology innovators/developers and is yet not targeting the mass market. The wider success of blockchain does depend on adoption by amateur users.

Our view. We remain skeptical about the ability for blockchain to replace existing non-digital transaction processes without clearer demonstrations of benefits to a wide range of users. However, blockchain is gaining traction within communities and marketplaces focused on the technology-enabled.

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Sebastian Vanderzeil is a Global Thematic Research Analyst with Cornerstone Capital Group. He holds an MBA from New York University’s Stern School of Business. Previously, Sebastian was an economic consultant with global technical services group AECOM, where he advised on the development and finance of major infrastructure across Asia and Australia. Sebastian also worked with the Queensland State Government on water and climate issues prior to establishing Australia’s first government-owned carbon broker, Ecofund Queensland.

Emma Currier is a Research Associate at Cornerstone Capital Group. Emma graduated with a Bachelors of Arts degree in Economics from Brown University in May 2016. While at school, she worked with the Socially Responsible Investing Fund and as a teaching assistant for the Public Health and Economics departments. She spent her sophomore summer researching differences between American and Indian educational styles in Arunachal Pradesh, India, and completed a summer investment bank analyst position with Citi in the Media & Telecom group in 2015.