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Blockchain Within the Context of Technological Revolutions

Technological innovation, social change, and political outcomes often lead to unexpected shifts. The current attitude of traditional financial representatives to digital currencies resembles similar periods from the past when the elite faced an inevitable transformation. In 1977, Ken Olson, Digital Equipment Corp founder and CEO, stated: "There is no point in having a personal computer at home."
be-in-the-loop - Blockchain Within the Context of Technological Revolutions

What signs of past technological revolutions can be seen in the development of the digital market

Technological innovation, social change, and political outcomes often lead to unexpected shifts. The current attitude of traditional financial representatives to digital currencies resembles similar periods from the past when the elite faced an inevitable transformation. In 1977, Ken Olson, Digital Equipment Corp founder and CEO, stated: “There is no point in having a personal computer at home.”

His words serve as a lesson for all successful businessmen about how dangerous it is to ignore imminent changes. The evolving digital market carries all the hallmarks of past technological revolutions:

be-in-the-loop - Blockchain Within the Context of Technological Revolutions

The non-linear development of technology allows completely redefining the future of the entire economy. Technological innovations are often used to automate existing processes and increase efficiency (for example, ordering DVDs through the Internet). Real disruption, however, occurs when technology reaches a level that allows creating completely new business models. Netflix’s evolution is a prime example: video streaming technology has virtually erased the demand for DVDs. Similarly, the emergence of the blockchain has radically changed trading processes, eliminating intermediaries such as large financial institutions and governments. Bitcoin, a currency not backed by any state or asset, has been created. Its mining is carried out exclusively by solving complex computational problems.

The emerging social subculture longs for change. New generations of avant-garde thinkers are against the status quo. During the Internet boom, Silicon Valley became the cradle of disrespectful techno geeks who were not afraid to ask questions and make bold decisions. The current generation of innovators has completely redefined the process of creating, exchanging and storing money. At the same time, they do not care what the industry pillars think. It turned out that for the currency to come into being is enough just to have buyers and sellers exchanging payments. Unexpectedly for the establishment, the subculture gained momentum – who would have thought that Bitcoin would cost more than $ 10,000?

As a rule, a technology of this magnitude is initially used for unseemly matters, which negatively affects trust in it. At an early stage of development, the Internet was used for gambling and pornography, as a result, some investors tried to stay away from it and doubted its potential. In a similar way, digital currencies allow anonymous payments that are not controlled by the authorities, making money laundering possible. are digital currencies a hoax or the holy grail of financial liberalization?

be-in-the-loop - Blockchain Within the Context of Technological Revolutions

If we take the revolutionary innovations of the past as an example, the answer will be neither the former nor the latter. The three phases of destruction observed throughout the history of technology are likely to recur in the cryptocurrency space. Here they are:

Creation Innovations are rapidly developing and capturing the general imagination, generating mega-profits for early investors. The current boom in digital currencies is similar to the Internet boom of the 1990s: then estimates of Internet startups were also taken out from thin air. Neither revenue nor profit was taken into account.

Similarly, digital currencies are constantly appearing today without any practical application, but with extremely high estimates. Gradually, we come to the end of this stage.

Compression Euphoria rises to a non-viable level, cost correction inspires critics, while separating promising projects from dummies. Probably, the cryptocurrency space expects a repeat of 2000, but in the long run, the correction will be beneficial for digital assets.

Institutionalization This is the final and most difficult stage of destruction, when only the best and most advanced projects survive. At one time, Internet business got reoriented to increase revenue and profits, while developing business models that would allow interacting with usual companies.

The final phase of destruction has led to the emergence of new industry giants — Google, Amazon, Netflix, etc. The same thing will happen with digital currencies.

Survivors will choose the path of regulation (self-regulation) and transparency. Investors will know how the money collected during the ICO is used and what profitability can be expected.

If cryptocurrencies go through a cycle of destruction, companies and projects that have survived all its stages will change the familiar financial system, create new sources of capital, investment and financing. They are likely to compete well not only with private investment funds and venture capitalists, but also with banks and trading exchanges, and digital currencies will begin to appear in both private and institutional portfolios.

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