Don’t be that guy…
“______ will never take off” — insert internet, electricity, Facebook or Bitcoin
Humans are strange.
We’re very good at some things, but we’re inherently bad at others.
One of the things we’re really bad at is intuiting or predicting non-linear growth, like that of networks that which had / will have a major impact on society, eg;
- the telephone,
- the internet, and yes;
Bitcoin is likely to be the most important, open, public network since the internet. I won’t delve too far into “why” in this post? — ?if you read the following article, you’ll understand exactly why:
How a strange species of ape went from Barter to Bitcoin. An Essay.hackernoon.com
But what I do want to show you is some historic examples of how wrong the talking heads have got it, and as a result give you some context on Bitcoin, and how it is evolving.
Let’s start with some networks of old. Networks which have basically become public utilities / and are trending toward being fundamental human rights in the digital age we’re moving into.
All-time greatest fails
Throughout history, the prevailing expertshave consistently failed to predict the growth of networks, especially those which had a profound impact on society, such as:
- The Telephone
- The Internet
- Money & Value Exchange
Not only did the experts of their time not predict their existence, nor forecast their growth, but they dismissed them and predicted their demise; from a place of authority, with an air of confidence.
Well…to show you just how good we were at getting it wrong, let’s review some of the more famous failed quotes, from experts in the domains you would’ve thought had the best chance at predicting, forecasting or at least recognising these emergent phenomena:
Lets start with the telephone & the internet. It seems the late 1800s was a good time to be wrong:
“The Americans have need of the telephone, but we do not. We have plenty of messenger boys.”
— Sir William Preece, Chief Engineer, British Post Office, 1878.
and good ol’ Western Union:
“This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.”
— A memo at Western Union, 1878 (or 1876).
How about electricity?
“When the Paris Exhibition [of 1878] closes, electric light will close with it and no more will be heard of it.”
— Oxford professor; Erasmus Wilson
Edison…who go it soooo wrong about AC:
“Fooling around with alternating current (AC) is just a waste of time. Nobody will use it, ever.”
— 1889: Thomas Edison
Here’s the Post Office at it again 😂 😂
“Before man reaches the moon, your mail will be delivered within hours from New York to Australia by guided missiles. We stand on the threshold of rocket mail.”
— 1959: Arthur Summerfield, U.S. Postmaster General.
Cell Phones anyone?
“Cellular phones will absolutely not replace local wire systems.”
— 1981: Marty Cooper, inventor.
Let’s move onto the internet:
“The truth is; no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works.”
— American astronomer and author Clifford Stoll, 1995
Oops..but that’s not the worst. My favourite is Paul Krugman, who most recently said that Bitcoin’s never going to make it..
“The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”
— 1998: Paul Krugman, winner of the Nobel Prize in Economics
And we still haven’t got much better. Here’s 2005:
“There’s just not that many videos I want to watch.”
— 2005: Steve Chen, CTO and co-founder of YouTube, worried about the viability of his new start up.
There were soooo many more I wanted to include in here, but I think the above paints a good enough picture.
Here we are, in 2018; and we have our generation’s emergent network: Bitcoin.
And true to history, we have the same sort of forecasts from “experts” in the field. Jamie Dimon called Bitcoin a Fraud, Warren Buffet called it Rat Poison & Jordan Belfort (of all people) said it’s a scam ??
All of this whilst the Bitcoin network remains the most secure digital network humans have ever built, whilst more people continue to get involved, and more wallets, exchanges, on ramps, and infrastructure are being built around it.
No, ladies & gentlemen. Just like the great public networks that came before it, Bitcoin is not going away anytime soon, contrary to what Wired Magazine would’ve had you believe in 2012.
“Wired, Tired, Expired for 2012: EXPIRED — Bitcoin”
For a little context. Had you put $1000 into Bitcoin when Wired wrote that article, even after this so-called “crash” of 2018, you’d be sitting on roughly $405,000AUD worth today (31st Dec 2018).
Not bad if you ask me.
Why the Air Swings?
Ok ok…I know I said I wouldn’t go into why…but here’s the short version.
The human mind has developed over hundreds of thousands of years to think & perceive linearly.
Out in the Savannah, when you’re running from a lion, you need to be aware of how quickly you can outrun it? — ?or you’re dead!
Linear thought is a survival mechanism:
30 steps = 30m.
Another 30 steps = 60m all up. Linear.
Exponential Growth on the other hand, is a doubling at each step.
It’s on the other end of the spectrum.
Moore’s Law, which many of you have heard of, is an example that gets thrown around all the time:
“the number of transistors in an integrated circuit doubles roughly every 2yrs”.
Tech has followed this trajectory very closely over the past 70yrs and is a big reason why we’ve been wrong (as a society) on just about every tech-centered prediction we’ve made in the last century.
Its non-intuitive, and something we’ve not had to deal with directly as a species until the modern, digital age.
Comparison to linear:
30 linear steps = 30 metres.
30 exponential steps = 1bn metres!
Network growth (which is quadratic in nature) is very similar. It’s best described by Metcalfe’s law, which states that:
“the number of potential connections in a network is proportional to the square of the number of participants, ie; n2”
So if there is 1 person in the network, there is one connection.
10 = 100 connections
100 = 10,000 connections
1000 = 1m connections
1m = 1,000,000,000,000 connections
Neither economists, nor bankers, nor astronomers, nor any of us can intuitively grasp this. It’s not in our DNA to do so, and to add to that; most of the training in traditional disciplines is built around linear, local concepts? — ?so it further conditions us away from how technology & networks grow.
Now here’s an interesting thought:
Bitcoin is a combination of both Quadratic Network Growth & Exponential Technological Expansion.
That only happens once in a while — In fact; the last time something so big happened was the Internet — and although one could argue AWS and Facebook are good examples too, I would say the internet is more akin to Bitcoin because they’re both more like utilities than companies; and despite how much both the internet & Bitcoin have both already changed the world, I’d argue we’re just scratching the surface, for each; especially Bitcoin, in terms of where it is in the cycle.
I found this video from Jeff Bezos. It’s a TED talk from 2003.
That’s right in the aftermath of the dot-com bubble. Watching it was surreal. You could literally replace the word “internet” with “Bitcoin” and it would’ve sounded exactly like it was recorded in Dec 2018.
The internet seems like such a crazy, out there concept back then. Now it just…is…
Jeff Bezos: The Electricity Metaphor. TED Talks 2003
I’ve gone on long enough now, but I hope you get my point.
Public networks that do take off are the most asymmetric bets you can possibly make, but they’re also the most rare. I don’t subscribe to the idea that we’ll have multiple Bitcoins / versions — because communication & exchange type networks generally converge to unity (within their jurisdiction) — as that’s where they have the most utility.
Bitcoin is a communication / value exchange network built on the internet. That’s about as a borderless & uni-jurisdictional as you’re going to get.
So I implore you to not dismiss it as a fad, or as a bubble, or as some silly internet get-rich-quick scheme.
Instead, you may want to consider the following:
Start accumulating some Bitcoin.
We’re building Amber: www.getamber.io, which automates the process by swapping the excess spare change (to the nearest dollar) for Bitcoin, on all your daily transactions. In this way, you can begin to accumulate with money you wouldn’t normally notice, every day.
Repeat Step 1.
Repeat Step 2, but now do more; in line with you great level of knowledge, understanding & confidence.
2019 is going to be an extremely important year for Bitcoin, and for the broader world / economy / society. It’s going to be a great time for you to begin your journey, and if you’re ever in need of help / information / assistance, reach out to me on the links below.
FYI; Bitcoin has died over 300 times already (according to the media)
This is an excellent site which covers each major article / announcement of Bitcoin’s “death”.
Until today Bitcoin has died 300 times. We collect Bitcoin obituaries from around the web. If you have a Bitcoin…99bitcoins.com
Something this resilient is very much worth being involved in — in whatever capacity you’re comfortable with, or can become comfortable with.
I hope you got some value out of this, and I wish everyone an amazing end to 2018, and a prosperous new chapter ahead.
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CEO & Co-Founder @ Amber Labs
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Originally published at getamber.io on January 1, 2019.