Financial hype cycles are predictable mostly because they mimic fashion fads and music fads.
For example, there was a time in this reporter’s life when she aspired to be cutting edge and cool. Joyfully, no longer.
This involved dying her hair pink (as much as she could get away with without being expelled), reading NME and Melody Maker, and listening to the most obscure bands available in the acceptable genre, which was Indy rock.
If and when the bands went “mainstream”, however — something assessed by whether the year below was listening to them — it was time to move on and find something more obscure. “Are you seriously listening to Blur? What seriously? Jeez. I much prefer Radiohead. What!? You’ve never heard of Radiohead? I can’t believe it. I’ve been a fan for like ‘forever’. You’re not cool.”
But even that cycle eventually became repetitive, predictable and conformist in its own right. To be truly non-conformist one had to adopt an entirely new musical genre (drum and bass). But then *that* genre got polluted too. Long story short, it was time to become a Barry Manilow fan – the ultimate act of musical defiance because no seventeen-year old in the world would dare to admit they enjoyed a bit of Mandy. And yet even this became a sub-genre by way of the cheesy revivalist movement. And soon enough there was no defence.
The only remaining option was to think to hell with it – I’ll embrace the all time greats and stop trying to second guess the musical popularity market. Rolling Stones. Kate Bush. Pink Floyd. Mozart. All the stuff that parents liked. The irony.
Financial technology fads are seemingly undergoing a similar pattern. Blur (bitcoin) evolved into a love of Radiohead (Blockchain). But Radiohead (blockchain) was adopted too quickly by those who then compromised the likeability of the entire Indy genre (cryptocurrency).
It was time consequently to turn to drum and bass (private blockchains). But drum and bass was being cross-polluted by Indy rock enthusiasts (cryptocurrency enthusiasts) so it became time to embrace something totally radical and segregated, ie go backwards to an ironic appreciation of Barry Manilow abandoning all refs to modern musical phenomena (Distributed Ledger Technology).
Which puts us roughly at the point where cheesy revivalism should be turning into a general love of the all time provable greats (old school centralised ledger technology, but you know, digitally remastered).
Suffice to say, there is some commentary emerging to suggest we are indeed in a phase transition and what’s cool isn’t the blockchain anymore but rather the defiant acknowledgement that the old operating system — for all its flaws — is built on the right regulatory, legal and trusted foundations after all and just needs some basic tweaking. And in that regard the following appear to be early trend setters.
Credit Suisse’s team this month on blockchain limitations:Do follow the link. Each paragraph is worth study, the reward being an amazing amount of information conveyed.
The buzz surrounding blockchain is comparable to that surrounding the internet in the late 1980s – some go as far as to suggest that blockchain has the potential to reimagine and reinvent key institutions – for example, the corporation. We are less sanguine, and note eight key challenges that have the potential to limit the utility, and therefore reduce adoption, of blockchain systems.1. Security vs Cost trade off: The security of the bitcoin blockchain is ensured by syntactic rules and computational barriers to mining. Permissioned architectures are cheaper to run, but as we increase our trust in permissioned authors, we lose the distribution which is a guarantee of ledger integrity
2. Do you actually need blockchain? ‘If it ain’t broke, don’t fix it,’ for a blockchain to be relevant you must: (1) require a database, (2) need shared write access, (3) have unknown writers whose interests are not unified, and (4) not trust a third party to maintain the integrity of the data....MUCH MORE
By-the-bye I first saw Credit Suisse's point 2 done up decision tree style back in December in an article entitled "Why Blockchain must die in 2016":
The tree was based on an article at MultiChain's blog, "Avoiding the pointless blockchain project" which included the sentence: "If your requirements are fulfilled by today’s relational databases, you’d be insane to use a blockchain."
Sounds good to me.
Reading the entirety of the first post in combination with "How global money transfers will work in the future" (along with its handy translations) and most readers should be able to speak knowledgeably for at least a minute or two, which is really all you need.
See the Harvard Business Review post: "News You Can Use: 'How to Know If You Talk Too Much'"
But don't blame me if you start humming "Mandy".