🇬🇧Innovation Intelligence: Analysis and Considerations About the First Ten Years of BitCoin & CO.
It’s been more than ten years since the publication of Satoshi Nakamoto’s paper from which the epic of the bitcoin and the cryptoeconomy starts. So it seems useful to proceed with a general analysis, in the context of innovation intelligence, with regard to what has been and some consideration of what it will be. All historical and quantitative claims have easily available sources on the network for which it has been avoided encumber the post with useless links.
Utopias of an alternative monetary and financial system to the existing one existed before Nakamoto. Equally, the assumptions of basing these alternatives on digital have come a long way, since the 70s of the ‘ 900, with the advancing of technology. The guideline has always been the widespread distribution of control, in such a way as to disintermediate economic policies based on centralization and annul the advantage, monopolist and in chief of some actors, of being part of the intermediary elites. Nakamoto provides a formidable technological impulse to this utopia which, however, to the ten-year reckoning, has remained so. On the monetary side the cryptocurrency they were not imposed as a currency of exchange, having proved to be deficient in some parameters defining the currency itself. On the technical side the blockchain has had to be revised several times, depending on the risk of prevarication inherent in the protocol. On the social and political side, and perhaps because of the first two reasons, it did not have the force of impose itself : too many times has open to criticisms, for intrinsic reasons, of the feasibility of those who had to disappear for its cause ; on the other hand the information exchange transparency made available by it does not go hand in hand with the need for the perpetuation of the various regimes and their castes.
In assessing this, one must have in mind only public and mixed blockchains : for the latter only those where limitations of access to information by the nodes are governed by smart contracts, shared in advance by the nodes themselves. All the rest, in utopian optics of perfectly decentralized control, is wind, in the sense that controlled distributions in access to the network and / or blockchain-based information are only alternative applications to the existing.
So failure of the realizing of utopia? Yes and for now you can’t see forces able to reverse the process.
A distinction has arisen over time as the innovation blockchain proceeded in the path, far from concluding, of maturation. On the one hand, strictly monetary, markets in which cryptocurrency is traded; from the other industrial ones (including services), in which blockchain is a functional protocol to several sectors including the financial one.
In monetary optics the only feature for now relevant cryptocurrency is the speculative one : they only have the value reserve function (80% of the exchenages). In terms of traded volumes and number of transactions they have suffered a nearly constant surge until December 2017 to then fall (in general for both factors but with some difference) in 2018/19 following the collapse of exchange rates against the USD. The market, however, is not at all dead and, after seeing the abyss, he assaulted himself into a niche that evidently was the one that he really competed. The problem is that in absolute terms, even keeping in mind the highest in December of 2017, it was already a niche with respect to the rest of the world (of financial products) for which, even in speculative optics, its importance is, and remains, totally marginal.
Different to the industrial point of view. Here multisectoral investments have been affected by the 2018 beating (of the money side) but are reporting back to 2016 and early 2017 levels. One should not forget that two / three years ago blockchain was the macro-sector that collected most of the money intended for innovation (among start-ups, implementations, finalized acquisitions, and whatnot). Thanks to the evolution of artificial intelligence processes and smart-contract, symbiotic evolutionary elements of the blockchain, the dedicated solutions continue to be appreciated and approached by those who have to invest money in internal and external development. Shinning example the fintech whose current evolution would hardly have been possible without Nakamoto protocol. So in this view it has been ten years dense of opportunities and growth which, for now, can be expected to further improve.
On the technical side the main feature of the lack of centralization has produced all the worst possible effects. Anarchical communities of coders, mostly opposed, have given rise to fork, ramifications, replicas, replicas, carbon copies and more useful only to create confusion towards the theoretical mass adopter. The movement has not been able to express a line of thought leaders such as, for example, the one that has led in the past ‘ 90 the net’s spread. There are exceptions, one for all Vitalik Buterin of Etherum, but none has been able to assume the role of mentor of the movement that, exhausted the initial and media boost, finds itself without a significant ‘killer app’. The ‘disruption’ component of innovation has only made breakthrough on the side of ‘industrial’ functionality, lacking the socioeconomic objective.
On the monetary side the situation has turned out to be even worse. The utopia, failing completely in this respect, delivered the market to the intermediaries, and that is to the exchangers. For a karmic counterbalance those who had to be eliminated have become the protagonists. In this case, there has been a proliferation, even at the highest levels in view of the exchanged, of figures who rode the wave with improvised business structures : in the best cases have been subject to theft, in the worst they themselves have been (and continue to be) protagonists of swindling and market manipulation. This has further removed the potential mass from the use of the instrument for monetary purposes, even limited to speculation alone. Business models thus evolved to actors operating in jurisdictions that protect as much as possible the customer in the name of regulatory centralization (if applicable), and not in the ones of the perfect decentralization that is theoretically inherent in the protocol. So financial operators such others who work in other markers.
Functional development has instead made the lion’s share. ‘Illuminati’ in the different sectors have understood almost immediately the effectiveness, and above all, the efficiency of the blockchain : they on one side have developed useful products and, on the other, invested in it. Big-one such as Microsoft and IBM have been, platform-side, startled examples of players in this. Myriads of sectors have benefited in niches in which the costs of disintermediation of centralization are sensitive. Fintech, insurance, legaltech, transportation, no-profit, health have hatched and adopted mixed and private solutions in which funds and other types of investors have profusely invested and continue to do so.
In considering nlawful acts, you have to focus on three cases. The first two belong to the universe of cryptocurrencies, so to the public and monetary typology of the protocol. The first area consists of fraud and regular transactions stemming from other misconduct (blackmail, terrorism, substances and prohibited markets). They have occurred but the data clearly indicates how the volumes of money that are traceable to them are laughable, compared to other transaction methodologies through which frauds and illicit origin payments are being put in place. The third case relates to tokens, especially the ICO functionality in the fintech : also here in the complex nothing compared to the rest of the cases punishable in the global financial context. The unlawful acts related to cryptoeconomy in its 10-year period was therefore irrelevant in statistical terms and, considering the dynamics of demand and supply of cryptocurrencies it could not have been otherwise. However, this does not mean that instruments intended to prosecute and the investigation of marginalisation should be overlooked because, as the case is taught, they are always useful in the identification of reference criminal networks.
Being the first field of impact of blockchain innovation the monetary and financial one, the elites in this sector have reacted shrewdly quickly for preservation. They have raised the potential challenge in the functional sphere by triggering the fintech phenomenology that is leading to the disintermediation of the value chain, but in a way neither distributed nor decentralized. This reaction occurred earlier, more, with higher quality and diffusely in the countries most voted on innovation and is also observing in the insurance industry. The crypto movement in this evolution has actively contributed, in the sense that the type of genesis seen before has caused the result that it he was never taken as a serious threat to the status quo.
The media rode the tiger of sensationalism (illicit, exchange trending) by realizing in a few cases what the real entity, in good and bad, of the phenomenon was. Wises are recognized, in principle, by the particularity of having stopped moving forward with exemporaneous scoop and having inaugurated the dedicated sections of cryptoeconomy.
The industry has behaved in terms of efficiency, by making the protocol it own where the cost/benefit analysis suggested the opportunity.
The economic and law academy and the elites voted on the regulation, generalizing in the timing, struggled to understand what it was talking about for many years, mostly ignoring it. When they thought they understood it, they tried to bring everything to the existing, showing that they understood very little. Slowly, and only in some parts of the world, exponents of both sides are trying to place phenomenology in the perspective that an innovation with a character of disruption (but without the disruption in this case) need, and that is out-of-the-box.
Finally, the public and the politics. Public blockchain has in the concept of trust in transparency and the immutability of information transmitted its radical innovation foundation. This happens when trust is equi distributed across all nodes through an algorithm. This unlike a structure where the trust is imposed on nodes to a central entity that dogmatically self-refer itself trusted recipient, for the fact that it was placed in the conditions of existence. It follows, therefore, that the protocol in its pure form is a formidable tool of democracy if applied to the public. It goes without saying that any regime for its perpetuation should have control of transparency and manipulation of its own information : if left to third parties these characteristics do not allow it to survive. The ten years resulting is that perfectly public applications are zero : even in countries, such as Estonia very advanced in this road, in which blockchain is the founding digital protocol of the public communication the algorithm is always applied in a non-perfect way (from the decentralized side). For the essence of the protocol they do not predict fast change under this point of view.
Unless black swans, in technological terms and thinkers, who today neither perceive nor glimpse you can think that for the next five years the issue will not change much. Monetary and financial niches of instruments will be joined to the existing, conforming in terms of normative. In the industrial context, areas where transparency and / or reliability and / or security of information do rhyme with [ cutting costs of ] disintermediation, sectors will take competitive advantages from the use of the protocol and will develop investments and applications. If among these the publics will be one of the protagonists, the doubt is extremely high. On the other hand, equally destructive innovations, such as internet and mobile, have taken more than ten years to produce radical socioeconomic effects even if, objectively, the current technologies about timing and methodologies, for propagation and diffusion, are not comparable to those at the time of the examples.
It’s a regret to say but Italy, in good and bad, has had an absolutely less than marginal role in all crypto-epic. The non-existent movement, the academy and the regulation idem, absent investors, the media towed along by others, the publics and politics (still, despite the proclamations) even talking about it. They save some functional or derived micro-niches, of an informative, industrial and service nature, where isolated excellences have been highlighted
This post was originally published on April 25, 2019, in Italian version on www.thescanner.info .This is adaptation of a neuronal Italian/English AI translation by IBM Watson.