The Blockchain? Bah!

Hype alert: Why cryptocurrency isn’t, and will never be, nirvana

If the headline and subtitle sound familiar it is because they are a slightly modified version of the famous Newsweek article by Clifford Stoll released in 1995 — “The Internet? Bah!” which shows just how wrong contemporary reactionaries can be about major innovations.

Take, for example, the following paragraphs:

“Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic. Baloney.” “…Yet Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the Intenet. Uh, sure.” “Then there’s cyberbusiness. We’re promised instant catalog shopping–just point and click for great deals. We’ll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obsolete. So how come my local mall does more business in an afternoon than the entire Internet handles in a month?”

This comparison is being drawn because cryptocurrency and blockchain technology are as fundamentally world-changing as the internet, which too endured its fair share of controversy over its usefulness and touted potential.

The regulatory and user experience issues may seem insurmountable now — but look at how wrong the media and major industry experts can be about tech that went on to indisputably change the world:

“Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.”

Darryl Zanuck, executive at 20th Century Fox, 1946

“I think there is a world market for maybe five computers.”

Thomas Watson, president of IBM, 1943

“There is no reason anyone would want a computer in their home.”

Ken Olsen, founder of Digital Equipment Corporation, 1977

“Almost all of the many predictions now being made about 1996 hinge on the Internet’s continuing exponential growth. But I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.”

Robert Metcalfe, founder of 3Com, 1995

“Apple is already dead.”

Nathan Myhrvold, CTO of Microsoft, 1996.

Do any of the above sound familiar?

The reports of bitcoin and crypto‘s death have been greatly exaggerated — mainstream media reporting has declared it dead over 300 times during the past ten years.

“ICOs are dead.”

“Bitcoin is dead.”

The ICO economy will not die, although the amplified hype and fervent cult-like crypto supporter probably will. Why?

Because the ICO will just become a part of normal life — like the internet and the IPO before it. Cryptocurrency and the underlying technology powering it will be abstracted away from the end user — as Windows and Mac operating systems abstracted our computing experience from the specialist knowledge required to operate on the command line.

It is always healthy to encourage a certain amount of skepticism and not to take any claims at face value, case in point Theranos, but the grand global cryptocurrency financial experiment has worked. It is now much easier to send funds abroad than it ever was before. Even if you consider just this one small application of blockchain technology, this kind of empirical usefulness deserves to be taken seriously.

To those who continue to dismiss distributed ledger technology or cryptocurrency as ‘another fad’, at least try to understand it— most of the internet’s ‘killer apps’ appeared many years after its inception and the Newsweek article’s release.

When reading an article about why the latest bank or traditional financial institution has declared crypto dead or blockchain useless — cast your mind back to how the horse salesmen must have desperately clung to their same tired talking points while the motor vehicle came along and ate their lunch. These crypto obituaries are usually not much more than blatant confirmation bias and an echo chamber effect where those most affected by impending disintermediation like to reassure each other that everything is OK.

Be part of the few that saw and embraced the potential of the new technology in those very early days of the internet, like Jeff Bezos, Larry Page and Sergey Brin. It is not a coincidence that these are now some of the most powerful and wealthy men in the world.

Kind regards,

Daniel Schwartzkopff

CEO, Invictus Capital

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