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Cryptocurrencies are a dominant theme in finance, but blockchain technology underpinning digital assets has yet to find its application.

Bitcoin has fallen 70 percent year-to-date against the U.S. dollar, and ether has shed 85 percent of book value. The hype around cryptocurrencies has fizzled.

By contrast, announcements about use and promise blockchain are still arriving in rapid-fire fashion. Financial firms of any size seem to view distributed ledger technology at least as an opportunity to talk about innovation.

Trough of Disillusion

But, what investors forget is that the technology has shown remarkably little use or advancement in real-world applications: its case is thus far based on promises of revolution by tech gurus and their disciples.

This is true in the financial industry as well as otherwise. A study of development aid projects which wanted to work with blockchain technology failed to show even one successful use.

Observers fear the technology will soon hit the trough of disillusionment – a reference to the hype cycle coined by research firm Gartner which predicts that new technologies are first hyped, then dropped, before slowly being adapted. 

Shovels, Jeans

This not to say new technologies are financially barren. The 19th century American Gold Rush didn't make the hopeful masses chasing riches wealthy. Instead, it minted mining firms and suppliers into millionaires. Levi Strauss famously grew rich on producing denim wear for minders, and today the shovel is the metaphor uses most often for who will make money from blockchain. 

Banks which are opening their doors to crypto firms are in a similar position: technologically, blockchain hasn't revolutionized the world quite yet. The digital asset industry still has to prove to its clients that it can produce more than simply white papers.

Big Names on Sidelines