Although blockchain and the internet are two fundamentally different technologies, there are similarities in their technological adoption. Blockchain businesses can learn valuable lessons from the internet’s early days.
Judged by its disruptive potential, blockchain technology is often getting compared to the internet of the early 1990s. Even though both technologies are fundamentally different from a technological point of view, it’s the potential for creative destruction and upheaval that they have in common.
A comparison between the rise of the internet in the 90s and the current state of blockchain is neither perfect nor linear. The technologies are just too different in nature. However, we can learn many lessons from the technological adoption of the internet while we’re trying to analyze the future potential of blockchain.
Fascination with the solution instead of the problem
When the internet was in its early days, it was so cool. It is still cool! But today it’s a given, back then it was an incredible innovation.
The internet allowed us to split up data into packages and send them to multiple receivers. Once the packages reach their final destination, they will assemble themselves back into their initial state.
That’s cool, but apart from a bunch of tech nerds, who cares?
Today we talk about blockchain technology in the same way. A decentralized and distributed network that stores and verifies data via a consensus mechanism.
Ok, cool, but would your grandmother buy it?
Just like in the early days of the internet, we are too fascinated by the technology. And then we go out and try to find problems for the solution. But it really should be the other way around.
Further down the road, the internet started to solve real problems and that’s when it became a mainstream technology.
Likewise, blockchain is slowly moving out of the hype territory and businesses are looking for use cases that solve real-world problems.
Solving problems, that’s what matters. Apart from a very small community, nobody cared about the technology of the internet yesterday, and nobody will care about blockchain technology tomorrow.
A technology turns into an industry
In its early days, the internet was a new technology, but not a business and certainly not an industry. That changed with the Netscape IPO on August 09, 1995.
A few months later, the AltaVista search engine became the first big overnight success story of the internet.
From then onwards, internet businesses started to pop up everywhere and a year later the “internet industry” was in full swing.
The “blockchain industry” has developed in a similar way. When Satoshi Nakamoto introduced Bitcoin in 2008, it was more a playing field for nerds and techno-anarchic libertarians.
The first reported ICO took place five years later, when Mastercoin raised a respectable $500,000 in 2013. From then onwards, blockchain has been on the radar of many businesses.
In 2019 the “blockchain industry” consists of various tech startups and established companies, specialized law firms and consultants, associations and research institutes.
The use of the technology has gone way beyond its initial application. While prior to 2013, blockchain was mostly used as the underlying technology of cryptocurrencies, nowadays corporations worldwide use blockchain in a wide range of use cases.
The bubble had to burst first, before reality could set in
In 1999, internet-businesses were running insane get-rich-quick schemes that had no economic value whatsoever. At the same time, a lot of amazing businesses were built as well, but they were largely overshadowed by the craziness.
And then: Booom!! The dotcom crisis hit in 2000. The internet bubble had burst, and a many people lost a lot of money.
That wasn’t necessarily a bad thing. The crisis separated the wheat from the chaff and companies focused on building sustainable businesses. The hype was over, it was time to solve real problems and create added-value.
We can observe a similar trend in the blockchain industry today. In December 2017, blockchain – and especially cryptocurrencies – reached the peak of the hype cycle. At that time, Bitcoin was valued at more than $19,000.
Then, in 2018, bitcoin lost nearly 80% in value. The bubble had burst, the hype was fading away, and now businesses start solving real problems.
Scalability was an issue at first
Scalability was a major issue of early internet-based applications. But over the years programming languages became faster, processes became more efficient, developers became smarter and internet technology evolved. Nowadays, supporting web-based applications at a large scale is not a problem anymore.
Scalability is also a major challenge of state of the art blockchains. And just like back then, blockchain developers are aware of the issue and are working on solutions. It’s just a matter of time until the technology will become better.
Even though the internet and blockchain are different technologies with a different focus and different applications, the cycle of technological adoption is similar in many ways.
Does that mean blockchain will eventually become as successful and disruptive as the internet? Nobody can answer this question at this point.
But the potential is there. We have more than enough problems and blockchain could solve many of them. If blockchain businesses can find solutions to the major challenges of our time, like internet businesses have done and continue to do, then the sky is the limit.
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