Chaper 9: LET’S INNOVATE — NOT REGULATE
When something is new and threatening, our reptile brains scream “Stop!”, “Run away!”, “Control!”. In this new daunting world of crypto, that’s exactly what we are seeing. Our power institutions are regulating, trying to protect us from the unknown and possible evil. Or are they really? Perhaps they are actually just trying to protect themselves and their pure existence. And in the meanwhile restraining us citizens from something purely magical.
Following his new book on digital strategy How To Become A Digital Marketing Hero, Rufus Lidman is now translating all his knowledge to the most revolutionary field in the world. A field in desperate need of a digital strategy. In a series of articles, we will get an upclose view of this new mind-blowing market, seen through the eyes of a digital strategist.
>> Chapter 1: The Revolutionary Technology That Will Change Your Life
>> Chapter 2: The Birth Of The Future
>> Chapter 3: A Real Revolution In Practice
>> Chapter 4: A Metamorphosis You Are Not Prepared For
>> Chapter 5: The Apocalypse Of The Establishment
>> Chapter 6: The Secret Recipe To Reach The Absolute Top
>> Chapter 7: The Simple Answer To The Global Problems
>> Chapter 8: Crypto Hits Rock Bottom — But Is It Really That Bad?
After going over the background of blockchain technology, looking at its goals and business minded ambitions as well as moral applications, we’ve gained some insight into the potential of the technology itself.
We’ve addressed the speed bumps and wrong turns of the first wave. We’ve taken a look at the artificial life support of the centralized systems of today. We have stated the need for a second wave, not just to repair the damage of the first wave, but also to finalize and ensure the disruption of the centralized hierarchy.
Now we will move on a step further.
The Year Started Off With Some Bad News
As we saw earlier, this year opened with a stock market hiccup. The entirety of the crypto market suddenly deflated as a result. Following an untenable increase of 3 300 percent during 2017, it dropped by 46 percent during a five week period at the beginning of this year. Then bouncing back with an equally shocking 48 percent rise. And has been going strong ever since.
Then bitcoin gained even more unwanted attention, following a report claiming that over 25 percent of all bitcoin users are criminals involved in drug cartels and organized crime.
Scary, huh? All of this stuff about crypto and the blockchain is just so appalling! These cryptocurrencies are so dreadful, you’d do best not to have any contact with them. At all! So, we have to do something about it!
Well, then maybe you should use the same logic regarding US dollars, considering it’s the most used currency throughout the history for drug cartels and other criminal activity.
Five years ago, a credible study showed that 2 billion (!) outstanding dollars are being used for illegal activities at any given moment — corresponding to an astounding 12 percent of the yearly BNP (14 percent for the entirety of the OECD). We’re talking 24 000 times the amount of bitcoin being used for the same purpose.
So, still think this whole crypto thing is so foolish and bewildering, that it’s best that we all just pull the break? I mean, taking the crypto path would mean the abandonment of any kind of gold standard as a historical basis of value. Gold, mind you, being the most functionally overvalued and useless substance used for trading.
But hello, isn’t it GOLD we’re talking about here!
If you don’t follow me, read Harari. Or just stop and think about it. Whether gold has any value beyond what has been agreed upon, apart from being a ”snuggle blanket” for bankers.
Do you know how speculative gold is in its financial worth? During a single year, its value went up 150 percent, following the last stock market crash. Only to drop 26 percent to a markup of over 900 billion USD today. Compare this to the combined value of all 1550 cryptocurrencies in the world — estimated at barely 57 billion USD.
And still, the foundation of the entire notion of economic stability in a country is exactly that, the ”gold reserve”.
Guilt By Association
Anyway, back to crypto, and its hardship. When I look at what’s acting out in the market in front of me, I note that the burden of proof seems to have all but disappeared in favour of what I chose to call “guilt by association”. Meaning the following:
1. Those who use bitcoin or altcoin automatically get associated with something atrocious, either organized crime or drug dealing.
2. Those who buy into bitcoin or altcoin are automatically associated with idiocy, expected to be financial speculators and scammers, since these are the people who used bitcoin and altcoin in the past.
By default, this is a weak argument and a logical illusion — an association fallacy. Like most fallacies, it is not addressing the matter itself (cryptocurrency), but draws a false equivalency that because it has beenassociated with evil, it must be evil.
But hey, just because you live in the same apartment complex as a tax dodger, you must be one too, right? If your child went to the same school as a bedwetter, then probably your kid is one also. And yes, if you play golf, you must be a cocaine addict, serial cheater and — a murderer! After all, both Tiger Woods and OJ Simpson play golf.
“The banks are openly terrified, crying wolf and even banning its employees from buying BTC.”
So what’s the net result? In my native Sweden, we go out and use the same instinctive reptilian brain-guided behavior that’s been intact since the cro magnon era. Even though 100 000 people invested in Bitcoin in Sweden alone (over 100 million worldwide), the governor of the Swedish Central Bank publically relinquishes all responsibility, warning the general public that they do so ”at their own risk”. The Financial Supervisory Authority further scares the hell out of people, issuing public warnings and risk statements. The banks are openly terrified, crying wolf and even banning its employees from buying BTC.
It all gives off very conspicuous third world country vibes. All the whilst prominent, more forward-thinking nations like Switzerland, Japan and now also Spain are hogging all the business from the rest of the world. Leading companies like IBM and Samsung, in turn, go for the the lucrative businesses. Others, such as shipping companies, financiers and the so-called “good society” adopt the business practices of the rest of the world’s industries.
The Standard Solution — Regulation.
First we use the most primitive parts of our brains to threaten, warn and scream out loud. Then we finally reach the default answer when we don’t understand something, or when everything is going a little too fast for us to fully comprehend it — we go to Big Brother, the government. The kind of institutions the blockchain itself directly threatens to reduce, if not outright eliminate.
Then we lean towards our power institutions and ask them to, at best, ban whatever threatens our status quo, or at the very least, regulate it! The latter method most often depending on attempts to shoehorn a new technology into existing regulations (aka the European route). The former method being used after realizing the shoe doesn’t fit anyway so we might as well just ban it outright (aka the Chinese way).
Both options raises more questions than answers however.
At least two questions appear immediately. The first being the most obvious, and that’s related to who we’re calling out for. If the entity we are reaching out to for regulation of the new technology, is the very same one that is most threatened by it, how can we be sure they won’t be tempted to overregulate something that might otherwise mean a net good for the rest of us?
If it wasn’t such a serious issue, music would be ringing in my ears; ”Would you run to me if somebody hurt you, even if that somebody was me?”
The second question is about the whole foundation behind human evolution. That is, why we call out for help. Because in what way can regulation help further the development of a society, a company or even a single individual? After all, when you boil it down, all regulation is, is a kind of artificial limitation of action onto a society. Regulation and regulatory bodies, much like traditional laws, may often help prevent chaos and anarchy in a society, but may also often be misused by zealots. And ultimately, at least in the field of technology, it will hurt the development and integration more than it will help.
The Sober Awakening
At the same time, we should still consider our knee-jerk, gut reactions in favor of regulation. While it may impede on the otherwise unavoidable evolution of society by stifling it in its infancy, it may also create favorable conditions for the technology to prosper by weeding out the dysfunctional applications. And then pave the way for the more well-functioning appliances to flourish.
Though nevertheless, that’s just the first step. It may be a bit of an issue to physically remove the worst junk from the new technological developments. But it’s even more of an issue to mentally expunge the worst of the fears and baseless paranoia for the new.
For those of us who don’t instinctively guard ourselves from everything new with a wall of skepticism and fear, neither bitcoin nor altcoin appear anywhere near scary. They instead see the analysis itself as a logical fallacy that is based on minimizing risk, rather than maximizing utility.
But nevertheless, it’s not all bright skies and butterflies.
The First Wave
Because what logic dictates and what history has shown us — bitcoin and altcoin are only the beginning.
Always in revolutionary changes and processes, it’s inevitable to find scammers and charlatans trying to exploit the public asymmetry in knowledge of the new. But on the flipside, that also means there are a whole bunch of heroes out there, fighting to make the right impression on both individuals and society, companies and organizations.
These heroes are the ones that do the heavy lifting and groundbreaking. Heroes who, unfortunately, sow twice as much as they reap, while others often benefit most. These are the ones that end up having what’s called first-mover-disadvantage.
A first-mover-disadvantage is defined by three distinct parts:
One is that our heroes, perhaps precisely because of the absence of regulation, get mixed in with charlatans and con artists, which makes it hard for the general public to distinguish them.
Two, that our heroes often don’t succeed due to exciting but verdant technology or immature applications.
But mostly also third, that our heroes don’t succeed due to the cowardice of the rest of us, our unwillingness to change the way we live and our instinctive fear of the unknown.
The Second Wave
The good news is that always after a first wave, there’s a second wave. A wave that comes after the first heroes, such as Netscape, Altavista and Myspace. Heroes who, despite being initially mixed up with frauds and scammers, and despite unripe technology and even despite our fears, managed to break new ground.
The second wave then comes in as a dialectic antithesis to the first wave, having been cleansed of all dishonest tendencies and financial speculation. Selecting technology that works without question or fault, and that adapted itself not only to consumer demand but consumer capacity. By initially adapting to what the consumer, investors and politicians ”can handle”, rather than the full potential of the technology. That’s why second wave applications survive longer.
From Speculation to Function
To put it succinctly — it’s a matter of going from speculation to functionality and from creativity to security.
It’s a matter of utility. Total utility.
And the force that came with the first wave, will be the wedge that presents the primary condition. The creative destruction that paves the way. The disruption that raked the ring and left room for the true revolution.
Try to regulate that into oblivion if you can!
That’s part of the game. The strategists, digital as well as analogue, who raise their heads above the sand and look at the sky, they see the powerful reasons for retreating. Reasons for falling back on old defense mechanisms in a vain effort to pull the plug and stop the whole show before it even begins. Before it’s too late.
Because they know they’re all going the way of the dodo. They know they’re all going to disappear.
Because it’s already too late.
Do Or Die — It’s Time To Wake Up
It’s simply a do-or-die process that’s going on out there. And it’s not just a question of a group of heroic pioneers that are breaking new ground, naive enough not to realize they won’t be the ones who stand to gain from it. Flanked on either side by charlatans, taking all the credit alongside their profit.
There’s also an ocean of conservative has-beens, companies and organizations, even institutions who stand to disappear in their wake.
These are the ”yellow pages”, the ”Kodaks” and the ”Nokias” and ”Ericssons”. These are the retailers and mega companies that build their trust on their centralized structure. They are all in the firing line, waiting to either redesign or resign — construct or self-destruct.
To do or die.
In order to at all justify their continued existence, a ground-up reconceptualization of their organizational structure will be necessary. But more likely than not, they will fail to do so. Instead, in their panic and base instinct of self-preservation, they will turn to regulation rather than abdication as their salvation.
Once and for all.
“The rest of us are down in the trencher waiting for the ground to break, so we’ll be in the second wave with an insane momentum rushing out of the gate.”
But I know it’s hard. So maybe we have to help you out. Or rather the first wave helps you out. The rest of us are down in the trencher waiting for the ground to break, so we’ll be in the second wave with an insane momentum rushing out of the gate.
And then we won’t have any Achilles heels with immature technology to blame. No brothers in arms in the grey areas to claim guilt by association for. No applications too crazy to scare the general public and the marketplace.
We’ll have utility and only utility. And a utility that will be so much more powerful than anything you or your friends or your colleagues have ever seen, or even able to imagine. To a point where in a situation of fight or flight, you’re better off with flight.
Because we’re coming. We’re coming to get you. We’re just letting our friends, the heroes, rake the ring first.
Cowardly or clever? You tell me. For me, it’s all about utility, an absolutely brutal utility. And that’s what matters for the consumers in the end, too.
If you’re smart, you’ll stop screaming at the rules and regulations around you and start innovating things yourself. If you’re only half-smart, you’ll keep screaming at the status quo and talk about the good old days and how things used to be.
We’ll see. Some of us won’t even just be seeing, but conquering in the second wave though. Maybe you should tag along for the ride, instead of drowning in its wake.
I’ll see you soon.