The blockchain sector appears to be one-of-a-kind, fresh, and frenzied, yet the growth of new industries over time is frighteningly predictable. Consider the gold rush in California, the global oil boom, or the internet’s ascent.
Each of these economic revolutions followed a symmetrical pattern. The first is a shift away from conjecture and toward reality. Every enterprise that has persisted began with the promise of riches, with marketing accelerating speculation in these new realms by emphasizing the sizzle. It’s all geared to turn people become sincere believers and encourage adoption.
Shifting demographics are the second aspect of economic disruptions. Over time, the mix of early adopters shifts, and more sorts of individuals, organizations, and businesses begin to join the party. These new entrants then put pressure on the field to introduce what is required to establish these new sectors successfully.
Third, value is typically produced after the first dust has settled in these new areas. It is the second wave of players that begin to direct things toward the creation of actual enterprises, with basics that serve as the foundation for long-term success.
The blockchain sector is moving away from hype and toward substance. The basic understanding of what is conceivable has improved dramatically. We’ve seen a wide range of applications. The demographics of the population have evolved. Institutional capital is making its way into the market. When tens of millions of individuals, many of whom are unaware that they are utilizing blockchain, you know you’re on your way.
The fact of the matter for blockchain is that a growing number of individuals are interested in learning more about the technology and how to use it to produce significant value. The more the demands imposed on the sector, the more smart the participant is. Traditional approaches for determining value in our area do not easily transition from previous practices.
The challenge is, how can we generate enduring value in an industry that has been so focused on short-term gain, and what does that look like?
There is no universally accepted concept of lasting worth. However, I’ve adopted a notion from Michael Porter, an author of several books on competitive advantage and strategy, that focuses on long-term strategic decision. Porter claims that regardless of technology or change speed, the essential elements of value generation stay constant. If we apply this logic now, all of the excitement around blockchain technology and cryptocurrency market volatility becomes meaningless to the fundamentals of value. What matters most is what this technology finally allows for — true, long-term value.
Elements of the traditional economy:
Infrastructure: Roads, bridges, pipes, bandwidth, and other infrastructure factors all contribute to the capacity to reliably trade value.
The ease of doing business: What are the impediments to participation in your economy for a larger range of people? The obstacles of beginning a firm, taxes and tariffs, and a country’s immigration are examples of these. All of these concerns act as roadblocks.
Education: You must be able to establish a space where individuals can readily obtain information and comprehend how to construct. The reason for this is that it becomes the center of your economy’s innovation. If you don’t, it’ll most likely get stagnant.
Sustainability: Major automakers, for example, are currently transitioning to electronic automobiles. Economic activity is, of course, at the heart of everything.
A basic interpretation is that the rate of innovation is determined by the interaction of all of these factors. Singapore, for example, spent a lot of money 50 years ago on education, technology, fair trade policies, and making it easier to conduct business. Its per capita gross domestic output was less than $1,000 50 years ago. It’s now around $60,000 per capita.
The issue is, what is the most significant determinant of performance from one country to the next? What is the level of friction in each of those areas? More friction means a slower speed and inadequate collaboration between these four elements. Consider what it would be like if you could start from scratch and create a new economy. What if there was a method to accomplish it without causing friction?
The future of banking will be based on a blockchain that has no downtime, no forking, and total finality. It will require a large number of active developers, as well as an increasing number of consumers and use cases. It would also have to be developed in a way that is environmentally friendly.
Those that are tireless in their quest of minimizing friction and focusing on creating long-term value will emerge as the ultimate victors in this field.
What is the future of the blockchain industry? The greatest thing we can do is try to establish a reliable set of economic indicators that can be assessed and used consistently across all web protocols. We’ll develop the appropriate criteria and indicators to demonstrate which initiatives add genuine value and to allow the true winners to prosper and advance swiftly.
The successful blockchains will continue to develop, construct, and establish a new type of economic engine that is based on the world’s greatest technological infrastructure. That is what matters in the end.