Technological Evolution ARPANET and Blockchain
It has been roughly a decade since the whitepaper for Bitcoin and its underlying blockchain technology emerged. Since then, the blockchain space has grown into a self-sufficient ecosystem, creating an entirely new wave of millennial wealth and jobs.
As we reach a critical point in the evolution of blockchain tech and digital assets, regulations, businesses, and investors both big and small are starting to take this seriously.
We’re seeing a shift of blockchain-powered services and products from a tech-ONLY sector to one that an average Joe can use without thinking twice.
2018 is not like the mid-nineties: nobody banked online, PayPal was for the tech-savvy, and the Internet was used by those with the patience to endure the screeching modem as it connected!
By going back further, it was not until the early seventies that ARPANET would be developed. This was followed by the Domain Name System (DNS) a decade after, laying the foundations of the commercialized Internet we use today.
History is currently repeating, and we are now in the eye of the storm with blockchain technology. In the future, this could be looked at as the next stage in the evolution of the Internet.
For this to work, blockchain tech still has to overcome many hurdles to truly disrupt and become the dominant technology going forward.
Some Will Stay Speculative, While Others Will be Driven by Utility
Cryptocurrencies have been at the forefront of disrupting complacent industries. It’s safe to say that digital assets, while volatile, are now respected and taken seriously by those in positions of power.
It’s also worth noting that Bitcoin is not the first digital currency. In the nineties, programmers played with the notion of an electronic cash system on several occasions. In 1996, e-Gold was launched, only to be shut down in 2009.
Lessons were learned from e-Gold, and Bitcoin emerged as a peer-to-peer cash system, a distributed system that could not be confiscated or suffer from a singular, centralized attack.
The bull market of 2017 was driven mainly by speculation and greed. With only Bitcoin and a small handful of other cryptocurrencies being used to buy tangible products and services in the real world, we witnessed blockchains becoming congested due to high network volume, making them expensive and slow.
Blockchains that cannot adapt and scale up will either fade away or remain speculative assets, while the winners will be valued by their technological capacity and utility.
What is needed for our favorite cryptocurrencies and blockchain applications to make it big-time?
Here are a few examples:
If a technology cannot scale or serve the targeted market efficiently, it is doomed to fail and remains speculative (until proven otherwise). If we look back to the growth of ARPANET and the introduction of DNS and other protocols, it is clear that the Internet itself also had to face these similar problems.
In the blockchain sector, countless innovative solutions are being developed. Some examples are:
- Bitcoin using SegWit and off-chain applications, such as the Lightning Network,
- Bitcoin Cash increasing its on-chain capacity by increasing the block size,
- Ethereum implementing a new algorithm (Proof-of-Stake) and also using off-chain applications,
- IOTA and NANO using the Tangle/DAG or similar technology,
There are many other examples and proposed solutions being used to scale blockchains, and the superior solution is still unknown for the time being.
With the ability to perform at scale, we can value digital assets accurately. The technology can then be more easily applied to utility-driven services and not be valued by what profit-hungry speculators deem it worthy of at the time.
Many already use Moore’s law and Metcalfe’s law to find an accurate valuation for digital assets. In multiple reports made by financial institutions, they state cryptocurrencies pose no real threat to the established monetary system. In time, this arrogance may not be the case as blockchains scale past the current capacity of Visa or SWIFT.
User Interface and User Experience
Making the technology user-friendly is also a big factor in getting people to use it. At the moment, cryptocurrencies have long alphanumeric addresses, take hours or days to sync a wallet (in some cases), and most people are not interested in hashes or generating cryptographic key pairs (private and public keys).
Scalability focuses on the back-end, while the user interface is the front-end. It’s also where the interaction happens, and often where the user judges the entire product or service (first impressions).
Over time, the online user experience has become much smoother and more streamlined, making it less awkward to find information or complete a task.
Scalability still plays its part in this. If the network is slow, expensive, and buggy, the user will not return. As technology progresses, interactive features become more streamlined and more professional.
Cryptocurrency platforms have rapidly evolved in recent years. Digital wallets such as Ledger, Jaxx, and Exodus have made the user experience much more pleasant.
Regulations and Corporate Capital?
While everyone can agree on the importance of scalability and a smooth user interface, regulations and corporations entering the space are where there are conflicted opinions.
Regulations over cryptocurrencies have been a major talking point for the last twelve months, and numerous stances have rocked the markets and triggered sharp price pullbacks.
In Japan, exchanges have been told to delist privacy-based coins, and in the U.S.A., Coinbase was ordered to hand over users’ data to the IRS.
Governments, banks, and corporations could also be laying down the regulatory framework for themselves, as this would create the perfect environment for them to capitalize on and enter the blockchain space.
Others believe it will create a foundation of trust and confidence, bringing in new investors both small and large. Either way, blockchain tech and cryptocurrencies are being watched by big brother closely!
For big businesses to stay competitive and cost-efficient, they must be prepared to adapt and embrace emerging technologies. If not, they will end up like many who refused to embrace the benefits of digital marketing and online advertising back in the early 2000s.
Start-ups in the blockchain space have been known to collaborate with established companies, bridging the innovation gap and putting the technology one step closer to utility-driven usage. This is often welcomed by the community, as it increases the chances of adoption.
The evolution of blockchain tech will likely continue to be an interesting journey, and many similarities can be seen to the emergence of the Internet we use daily. The adoption process may be several times faster than it was for the Internet as well.
Disclaimer: This is not investment advice. Please do your own research when considering investing in or trading cryptocurrencies.