Internet (APRANET) was built in the 70s during the cold war as a communications protocol that was exclusive to the US Department of Defense to withstand nuclear attacks. A protocol that ran on interconnected networks, where the hosts were the university campuses (only source for computers back then).
Bitcoin was built on a blockchain protocol as a P2P electronic cash system. Blocks of data are recorded and verified and incentive for authenticating the information within these blocks is Bitcoin.
Some major issues raised against bitcoin in its infancy stage are: Scaling will be an issue, it is too onerous to penetrate into the mainstream, it is only for the geeks, regulators mostly hate it, it will become a tool to be misused by terrorists and money launderers.
Now, let's look at some of the issues faced by internet back in the 80s and early 90s: It was illegal to use internet for commercial activity until 1993! It was thought that internet would become a conduit for nefarious activities. ‘Getting online’ was a tedious 30+ step process. It was claimed that internet will never scale as big companies don't need it... It took over 3 days to send an email. In short, there was no way anyone could have envisioned the internet giving birth to Amazon, Facebook, e-Bay, Uber, etc. all of which can be used by general public today with a few clicks.
Read through the above issues with internet again -- if you are someone who has been following crypto then these issues will resonate with you on crypto as well. This does not by itself imply that crypto or digital assets will be the next internet, but it does show that having such issues is perfectly normal.
Technology Adoption Lifecycle
Every technology has a 'Technology Adoption Lifecycle' and every such lifecycle has a chasm. To the left of this chasm are the early adopters - who built the idea, who were convinced it was the next big thing, who thought it was cool to use it, etc. To the right of the chasm are the masses, the significant majority who determine the success or failure of the technology. The chasm can typically only be crossed when the use of the technology is made easy for the masses before it loses its appeal or alternatives come up and make such technology obsolete.
Example 1: Pager -- a revolutionary product that took off rapidly but could not cross the chasm before the advent of mobile phones.
Example 2: Internet -- a product that was decades in the making and was not expected to scale as it did until there were ancillary products that brought them to our doorsteps - such as PC, browser and smartphones.
Long way to go
We are still to the left-most section of adoption in crypto and digital assets. That brings unlimited opportunity, but that also carries a risk. The move to the right can only be done through education, easier access to crypto, and operating in a space trusted by the masses (through regulation). However, we have to realise that this is most likely to be a marathon, not a sprint. It may also require quasi-centralisation, like how the internet, also a decentralised application, turned to centralised models to propel adoption of applications such as websites and emails.
Credit: a16z podcast featuring a16z co-founder Marc Andreessen.
Prashanth Swaminathan is an alumnus from IIT Guwahati and IIM Calcutta, who spent 10 years in investment banking at Morgan Stanley London. Along with esteemed advisors within this space and crypto, he is currently building a global product called ‘Tandem’ that aims at higher adoption of digital assets.
Read his columns here.
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