Will we learn from the past? And why do we feel so comfortable putting so much trust in technology?
Hello Steemians,
This post started as a reply on an excellent article by my good friend Keith. He blogs on a regular basis and it is brilliant. If you're interested in an interesting and fresh perspective on business challenges infused by experience, Keith is your man!
As I was replying to the article, I got a bit carried away and ended up exceeding the word count... So I decided to turn my thoughts into a blog post. So read Keith's article first, then my response and I'm very keen to hear your views!
MY RESPONSE:
One could make the argument that the “crypto currency” market is a whole new asset class itself, with a 170 billion USD market cap, 1175 crypto currencies and 5895 markets to date. I believe looking at crypto as one market could do with a little more refinement though, as it is not. In essence the crypto coins are a means to an end. It’s to enable the underlying blockchain technology to work, not the other way around.
And to be a bit of a purist, it’s not even one technology, there are multiple blockchains and applications of the technology across industries. I’m sure we’ll see the application of the technology succeed in certain industries whereas in others may not (peer-2-peer heart surgery?). Will there be crypto coins / companies that eventually go down to 0 or bust? Absolutely, heaps of them. Will Bitcoin? No. But that is not necessarily the most interesting discussion.
I believe that there are three blockchain characteristics that are the true diversifying factors here:
- Its transparency
- Its global decentralised peer-2-peer network and in particular
- Its cryptography enabled trust.
Transparency has many benefits. In comparison to the 1800s, the value that is being added (or lack thereof) by companies / service providers at different points in the value chain of almost any service or product is now visible. What that means is that people can now attach a value to it as well. Am I really willing to pay x% for a broker if I know what he/she is doing for it and could be replaced by a peer-to-peer platform? It provides a decision point, an alternative that we didn’t have before.
However since we’re putting this whole movement into a historical perspective, then trust is the one factor that is fundamentally different across the ages. Whereas in the past, as you pointed out, central authorities were founded to bring structure to the chaos and to ensure citizens could trust that their funds were safely protected, today it is the other way around. There is a lack of trust in the “establishment”, including the integrity of central authorities (e.g. banks and government). Citizens do not want to be protected by centralised authorities that they do not trust anymore. So the decentralised network seems to be the way forward, interacting directly with people again instead of these centralised authorities.
But think about that for a second, despite the fact that it seems as if we are trusting each other again, what is the really interesting thing here is that in reality we seem to be completely shifting our trust into technology instead. It is interesting isn’t it? We seem to be moving into a global world that trusts cryptology (who said math at school was useless?) and technology more than people. For me growing up in a world that was predominantly analogue, this is hard to grasp. However, I’m pretty sure if you would ask a millennial about this it would be a complete non-brainer.
I feel that there is a risk that people are jumping on the next best thing to satisfy a need they have (move away from the establishment) without realising they will put their trust in technology completely. Even though we are well and truly arrived in the information age, people tend to be a tad slow in waking up to what this actually means to them, especially from a personal data perspective (Equifax breach anyone?). The key thing to take away this risk and ensure success and mass adoption is (obviously) to avoid disaster. I believe the blockchain technology is already proving it is works as we speak… However it does lead to a discussion on which data can be used on a public blockchain and which data would actually require a private blockchain to protect privacy?
And here is another interesting thing, there is no doubt in my mind whatsoever that this is the exact argument that the various central authorities will use to step in and as you pointed out they have already started doing exactly that. China banning bitcoin and exchanges to buy them time to introduce their own crypto coin is a good example. However, like the internet, the decentralised way the network is designed means there is not one government that can shut it down. As long as there is one node running, the network is live.
So what’s the best solution going forward? In my opinion - next to all of us as customers - the corporate “winners” will be companies that are using the technology for a specific purpose, that can be adopted on a large scale and is better than the current solution. I believe that companies / coins that are creating long-term solutions that take into account public blockchains interacting with private blockchains will be positioned best. Regardless of whether private blockchains are the best way forward, it will happen and has already started and as you rightly point out, power plays will be abundant going forward. Companies that have acknowledged this and are anticipating on it will be the real winners in the future. As an example, what TenX anticipates doing with their COMIT network is an excellent example of this.