They say patience is a virtue. But markets, at least the parts and participants that we hear about every day, like quick hits. Long-term investors may sleep better at night but they don’t get much time in the spotlight.
Noelle Acheson is the former head of research at CoinDesk and Genesis Trading. This article is excerpted from her Crypto Is Macro Now newsletter, which focuses on the overlap between the shifting crypto and macro landscapes. These opinions are hers, and nothing she writes should be taken as investment advice.
Critics accuse the crypto ecosystem of failing to come up with a clear utility (in spite of global evidence to the contrary). They accuse us of hiding behind the “we’re still early” excuse. These are generally people steeped in traditional market ethics who expect clear and tangible results after just a few years of evolution, and they believe the perceived fact that these results haven’t materialized means they never will. I even recently heard someone insist that the internet didn’t take so long to get off the ground.
Well, not quite: ARPANET, the precursor to today’s vast network, sent its first message in 1969 – html and the first globally accessible websites didn’t appear until 22 years later. Seven years after that, a renowned economist was still insisting that the internet was unlikely to be relevant. We are only 14 years into the development path that was triggered with the processing of the first bitcoin transaction in 2009. Just imagine where the industry will be in 2031, 22 years after blockchain’s equivalent “first message,” and what kind of dismissals it will still be getting seven years after that. We are still early.
For further proof of this, we need look no further than a casual scan of crypto headlines on any day we care to choose. There will invariably be several talking about the evolution of existing blockchains, new blockchain designs, use case controversy and so on.
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Even the longest-running blockchain, Bitcoin, is still evolving. The community is currently caught up in a debate over whether it should be used for non-fungible tokens. On one side, we have those who believe in the power of evolution, experimentation and the lack of gatekeepers. On the other, we have those who worry about “silly pictures” clogging the network and detracting from its payments use case.
On the periphery are those who insist bitcoin (BTC) will never be used for payments. In emerging as well as not-so-emerging markets are many who already do. In sum, even Bitcoin’s utility is still being debated, just as its technological potential is being probed and expanded.
Other large networks such as Ethereum are in even greater stages of flux: upgrades to alter its functionality, radical changes to something as fundamental as address management, rapid layer 2 growth, fierce experimentation with security and privacy technologies, new applications, revised versions of existing ones and ambitious “Ethereum killer” competitors still emerging.
How can we not be early when we are still debating technology standards, let alone applications? Historian and economist Carlota Perez talks about cycles of technological adoption: First comes the installation phase in which the infrastructure is built, then comes the deployment phase when the technology is broadly adopted. Obviously, we are far from broad adoption – we don’t even agree yet on what that means. Not only are we still in the early phase of installation, we’re also trying to establish a new technological base with fragmented initiatives pursuing emerging use cases on a global, fragmented stage.
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What’s more, we’re doing so with strong regulatory resistance. This is frustrating but understandable: Blockchain technology is not trying to improve widgets or help us move faster. One of its main aims is to transform how we transact, and thus the technology is perceived as a threat by today’s gatekeepers. Arguably, finance should change slowly because there’s so much at risk. But resistance to change also poses a material danger to societal cohesion.
People with at least a passing acquaintance with history know that our civilization moves in cycles, each driven by a radically new technological innovation. It remains to be seen whether blockchain technology will usher in a new cycle or continue to build on that initiated with the rollout of the internet – I personally believe the former but, either way, only 14 years in, we’re early.
Critics are right in calling us out for sometimes hiding behind the “early” excuse to explain bad behavior and lax code vetting. Just because we’re a young ecosystem doesn’t mean we can’t do better.
In turn, however, we can call out those who stand on the outside looking in while criticizing us for not doing more, for not trying harder and for not succeeding despite the audacity of the change we want to see, and the colossal obstacles that have been in our way from the beginning. We can call out vested interests, those that put the static before the dynamic, and those more interested in the convenient than the meaningful.
Back in 2014, venture capitalist Marc Andreessen compared the state of Bitcoin then to that of the internet in 1994. I disagree with his diagnosis: When he made his comments Bitcoin was more like the internet in the 1980s, still figuring out what it wanted to be and how it could become useful.
But here’s the thing: Most of us couldn’t have invested in early internet businesses. That generational opportunity was limited to venture capitalists and their accredited investors. With the blockchain ecosystem, however, investment in early opportunities is open to anyone with an internet connection, anywhere in the world. And often, the investment is not – as in the 1990s – in a shell or wrapper that represents the technology. Now, the investment can be in the technology itself.
When will we no longer be early? When mainstream coverage is as much about adoption and new applications as it is about asset price moves. When the technology ceases to intimidate the crypto curious. When regulators see new financial applications as opportunities rather than threats.
That day may seem very far away at the moment. But it’s not – whether it’s five, 10 or 20 years from now, the crypto ecosystem is unlikely to give up or even slow down. Anyone who has ever built anything lasting knows that persistence, at scale, wins. And that change may seem a long time coming, right up until the moment it starts happening fast.