Michael J. Casey is chairman of CoinDesk’s planning board and a senior advisor of blockchain research at MIT’s Digital Currency Initiative.
casey, behavior therapy
I was at Token Fest in San Francisco last week. it had been truly a “Fest.”
The cocktails flowed at a VIP party the evening before opening. subsequent morning a band of mariachis and an elaborately costumed troupe of dancers led the primary waves of a complete of 1,800 attendees into stage . There, they heard accounts of how, despite regulatory risks and a significant correction in most crypto-asset prices, token projects and ICO fundraising events are still booming.
It all had a really late-1990s feel thereto .
And, just in case you’re wondering, I mean that within the absolute best of the way .
You see, although people that lost their shirts during the dot-com bubble might afflict me, I regard that end-of-millennium “Pets.com” phenomenon as a constructive event. and that i apply an equivalent positive mindset to the present crypto bubble. (Yes, this is often a bubble. People will lose money. Many coins will die. This isn’t FUD.)
One way to seem at the present bubble is thru the lens of Carlota Perez, the Venezuelan theorist who wrote about the interplay between technology and capital markets in an influential book called “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages.” She concluded that bubbles – and their inevitable collapse – are an integral, actually necessary, a part of the economic dynamics through which transformational technologies settle in society.
Speculation is an unavoidable accompaniment to periods of technological transformation. Whenever a replacement technology contains a wide-enough accepted promise that it can redefine core aspects of how our economy functions, people start throwing money at it.
It was an equivalent with the arrival of railroads, of electricity and of the web – the latter manifest because the dot-com boom. This happens because nobody yet understands how the new model of doing things will play out, and that they don’t yet have any idea who the winners are going to be . What they agree on is that something big is occurring . So society collectively engages during this wild, scattershot speculation.
That, I believe, is what’s happening now.
The good news, then, is that the crypto bubble is in some respects an affirmation that the technology we’re all so excited about it does indeed have huge potential albeit it’s still too nascent for major, disruptive deployment within the mainstream economy.
The bad news, for those heavily invested in speculative tokens – many of you readers, little question – is that the bubble may need to burst, even more painfully than it’s , before we will properly unlock this technology’s profound potential.
Here, the dot-com bubble is informative. The more sophisticated analyses of that otherwise painful event recognize what proportion the boom contributed to the event of the web .
All that cheap capital, initially invested in underdeveloped projects and tons of vaporware –Pets.com, Boo.com, Webvan then forth – helped buy the infrastructure upon which the longer term internet was built.
That money purchased the rollout of fiber-optic cables, went into R&D in 3G mobile technology and funded massive data centers. All of that “stuff” was then available, at deeply discounted rates, for developers to figure with after the bubble burst. It enabled everything that came afterward: smartphones, social media, algorithmic search, cloud computing, e-marketplaces, Big Data, etc. The sharing and platform economies were made possible by this infrastructure.
I think something similar goes on now. It’s just that we’re not building physical infrastructure. It’s social infrastructure.
The tokens that are a part of this current investment mania for ICOs are incentivizing the formation of collaborative networks of developers and entrepreneurs. Together they’re arising with new ideas, all iterated on top an earlier one. These ideas will shape the decentralized economy of the longer term .
Importantly, these ideas are being codified in open-source software that everybody can access. even as Satoshi Nakamoto built bitcoin upon a series of pre-existing technologies – public key cryptography, Merkle trees, Hashcash and peer-to-peer system design – so, too, will future developers be ready to take the pieces of this open-source code that they like and devise new composite technologies.
The code is public scaffolding. And tons of it’s being constructed immediately .
Few people would have predicted the business models that gave rise to the post-dot-com titans: Amazon, Google, Facebook, Apple, Netflix, Uber then forth. That’s the sweetness of open-source, extensible platforms. they’re the bottom upon which new second- and third-layer technologies are often implemented and flourish.
Well, now that we’re laying such a lot more of that open-access platform, we will apply boundless imagination to what may lie ahead. we will imagine a decentralized super-structure during which those centralized internet behemoths become subsequent in line for disruption, that their data-hogging models become redundant.
I have no idea who or what is going to be the winners within the decentralized economy of the longer term . But the framework for those ideas is being laid immediately .
And that’s worth celebrating.