Products and companies with sustainable competitive advantages and low capital requirements often make for attractive investments, provided they’re acquired at the right price. So where does this leave blockchain?

Blockchain technology—public, decentralized ledgers that record transactions in an efficient, verifiable, and permanent way—represents an exciting new frontier. Like the internet in the mid-90s, the potential to transform a variety of industries seems promising. On the flip side, it will likely be years before its benefits are fully realized, and the winners and losers will include both incumbents and disrupters alike.

Blockchain’s Tangible Benefits

Blockchain technology holds the potential to dramatically improve the speed and lower costs for complex payment activities or supply chains. Many established financial, technology, and industrial companies are already using blockchain technology—and the possibilities seem endless.

Consider a national grocery chain facing a listeria breakout. Speed represents an overriding concern as they race to pull tainted tomatoes from their shelves. Customers’ lives may be at stake, along with the store’s reputation. The problem? Identifying the contaminated tomatoes will take several days and could result in a substantial amount of waste as some good tomatoes are discarded with the bad.

With blockchain technology, this scenario could look very different. The entire chain of custody of the tomatoes—from the farm where they were picked until the time they were placed on the shelf—could be embedded in their QR code. A simple scanner could surgically pinpoint the tomatoes that need to be purged within a matter of hours.

A Solution in Search of a Problem?

Unlike the blockchain application mentioned above, cryptocurrencies’ value proposition seems more elusive. In other words, when we ask ourselves, “What problem does Bitcoin solve?” the answer isn’t as apparent.

Books and records aren’t particularly efficient even in digital form. In contrast, payment systems represent some of the world’s most advanced and fastest evolving technology. As a frame of reference, payment systems like MasterCard process more than 50,000 transactions per second while Bitcoin can process less than 10. That difference really adds up: in the third quarter of 2017, MasterCard processed nearly 17 billion transactions on its platform compared to just 22 million for Bitcoin (Display).