Overhyped and buzzwords abound — is Blockchain technology disruptive and the next generation of the internet?
Disruption. What is disruption? A hot buzzword we hear a lot in technology today. Clayton Christensen popularized the idea of disruptive technologies in his 1997 book The Innovator’s Dilemma. According to Christensen technology can be split into two categories: sustaining and disruptive. Sustaining technology is an incremental improvement to an established technology in an established market, usually on the higher end of the economic scale. Disruptive technology lacks refinement, faces challenges because it is new, appeals to a limited audience and may not yet have a proven practical application. It exists on the fringes. When it ultimately takes hold in the marketplace, it usually starts at the lower end or in new-market footholds, it displaces an established technology or its groundbreaking technology and it creates a whole new industry.
Consumer Demand & Disruption
Traditional methods of innovating products usually put development before conducting focus groups and customer research to find the perfect market fit. This older paradigm was supply-centric, predicated on developing the Product based on limited historical and aggregated consumer data rather than real-time and near-real-time social media analytics conveying the actual consumer real-time market demand. Now, thanks to the internet and social media, innovators can gauge consumer wants and needs early on. In addition, for something to not only innovate but ‘disrupt’ it also has to be on the right side of history, so to speak. Consumer demands that correlate with the right innovation at the right time drive disruptive innovation.
In 1876, Scottish-born Alexander Graham Bell, considered the ‘Father of Modern Communication’ was granted a patent for the telephone. He tried to sell the rights to his patent but industry leaders at the time felt his invention was ‘hardly more than a toy’. Ten years later over 150 000 people had a telephone.
Televisions, airplanes, mobile phones, personal computers, and even the automobile had naysayers early in their developments. Literary Digest magazine in 1899 proclaimed ‘The ordinary ‘horseless carriage’ is at present a luxury for the wealthy; and although its price will probably fall in the future, it will never, of course, come into as common use as the bicycle.’ The president of the Michigan Savings Bank stated ‘the horse is here to stay but the automobile is only a novelty — a fad.’ My favourite — the internet. An article in 1995 in Newsweek magazine on why the internet will fail. There were even predictions about online shopping as early as 1966. In an article titled ‘The Futurists: Looking Toward A.D. 2000,’ Time magazine stated: ‘Remote shopping, while entirely feasible, will flop — because women like to get out of the house, like to handle merchandise, like to be able to change their minds.’
Needless to say, it took years for these and many other innovations to become disruptive. AMAZON started as an online bookstore and no one can deny AMAZON is a disruptive force on many fronts. Consumer demands for cost savings, transparency & convenience is a major factor in AMAZON’S disruption including from women who ‘like to get out of the house, like to handle merchandise, like to be able to change our minds.’
Today more than ever, thanks to the world wide web and social media, there is a platform for the masses to voice wants, demands and to influence the industry. Trust now has a dollar value.
Bitcoin was born out of frustration and lack of trust in central banks and government largely due to the financial crisis of 2008, the worst financial disaster since the Great Depression. $8 trillion in lost household stock market wealth, $6 trillion in home value and an estimated 10 million Americans lost their homes. Checks and balances that should have been in place to protect the masses were ‘loosened’ to benefit the few.
In February 2009, a month after releasing the first Bitcoin software, Bitcoin inventor Satoshi Nakamoto said:
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.”
Bitcoin was created to convey a trusted marker of perceived and agreed value in order to transact between known and anonymous entities in a digital world.
Blockchain Technology — Decentralized, Immutable & Transparent
Digital currencies existed prior to Bitcoin but they didn’t succeed. Shifting from a centralized, server-based internet system to a cryptographic, transparent peer-to-peer network — is what made Bitcoin different. Building Bitcoin on Blockchain Technology was the missing piece of the puzzle.
Two aspects of Bitcoin are absolutely essential, and central to building the kind of trust that Nakamoto lacked in traditional institutions: decentralization and immutability.
What is Blockchain Technology?
According to a National Institute of Standards and Technology (NIST) report:
“A blockchain is essentially a decentralized ledger that maintains transaction records on many computers simultaneously. Once a group or a block of records is entered into the ledger, the block’s information is connected mathematically to other blocks, forming a chain of records. Because of this mathematical relationship, the information in a particular block cannot be altered without changing all subsequent blocks in the chain and creating a discrepancy that other record-keepers in the network would immediately notice. In this way, blockchain technology produces a dependable ledger without requiring record-keepers to know or trust one another, which eliminates the dangers that come with data being kept in a central location by a single owner.”
Smart Contracts — Coding Trust
In 1994 the concept of the smart contract was introduced by Nick Szabo, a legal scholar and cryptographer. He realized that a decentralized ledger could be used for self-executable contracts. These digital contracts could be converted into code and run on a blockchain. Smart Contracts extend the utility of blockchain technology from simple transactions to executing multi-party agreements. They are designed to work on condition-based principles — if this, then that.
We know there are current limitations of smart contracts including bugs, technical issues, and the oracle problem — interacting with external systems for verification of external information important to the reliable execution of the smart contract. However, incredible progress is being made to overcome these challenges and we are seeing smart contracts developed that go beyond ‘simple’ transactions.
Is Blockchain Technology Disruptive?
The growth in popularity of Bitcoin & Blockchain technology can be traced to breaches in trust. Since Bitcoin’s launch, issues of trust have exploded across many fronts. According to the 2019 Edelman Trust Barometer, only one in five people feels that the ‘system’ is working for them with nearly half the population believing the ‘system’ is failing them.
Blockchain Technology has the potential to be an incredible ‘equalizer’ for trust but it is still considered to be largely in its infancy stage — the revolution yet to occur.
Famous inventor Thomas Edison learned early in his career that inventions have no value unless someone is willing to pay for it. In his early twenties, he invented the electronic voting machine called the ‘electrographic vote recorder’. It would not only reduce the time it took to count votes it would also save money. No one wanted it. Legislators were happy with the inefficient process in place because it allowed for filibustering and politicking.
Will consumer demand for trust and transparency be great enough, at this time, to push Blockchain technology from ‘innovative’ to ‘disruptive’?
According to industry expert Randy McQuire, CEO of Liquidledgers: “It is the very shift from a centralized repository and all of the inherent encumbrances and entities required to transact to a widely distributed peer-to-peer process of trust that is unequivocally disruptive; perhaps even epoch shaping. Igniting and controlling fire was foundational to exponential human evolution and it was also ubiquitously disruptive.
I believe the argument is specious and provocateurs are using semantics to promote their brand rather than embracing a cogent analysis of the truly revolutionary ways humans can organize and conduct their affairs with this new, highly distributed trustless technology that can be utilized for transformation within the entire field of information. That is both foundational to new organizing paradigms, and wholly disruptive to how processes and entities interact today. And this revelation stands on its own as a sentinel of change.
Now add Artificial Intelligence, Augmented Reality, IoT, and Quantum Computing to this new process paradigm of Blockchain, and Hyper Super Disruption becomes a normative accelerator of omnipotent change.
Consideration for labeling or taking stock of the current application and penetration of the technology are myopic and endemic to the kind of pedestrian human reasoning that compelled a revolutionary named Steve Jobs to insist that great change is led by the misfits, the rebels, the crazy ones, the round pegs in square holes, the people who are willing to Think Different.”
One thing is certain — consumers are demanding transparency, efficiency and trust, and Blockchain technology provides one source of truth and it is immutable.
Innovative? A fad? Disruptive? Perhaps too soon to say either way. For now, I’ll sit in the fringes with my CryptoChicks, CryptoPunks and other blockchain and crypto geeks and wait for the disruption.
Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.
— Steve Jobs, 1997
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