Blockchain technology may have arrived too early, but it’s done now

It’s a useful exercise for those of us in the tech to focus on the dot-com boom and bust of the late 1990s. You can learn a lot from this time. Time was critical to the United States and the global economy, and a pivotal moment for the technology sector. It’s helpful to keep these helter-skelter days in mind when assessing the current crypto ecosystem.

Most people will rightly point to the spate of Super Bowl ads that come in at over $ 2 million each, or the IPOs that were up more than 1,000% on opening day as the defining memories of the time and they would be right. It was a time of maddening excitement when the fundamentals of technology and business models were often neglected by sky-high growth projections. That excitement only arose because the technology opened up a new approach to business. Well-run companies built on network effects have survived the crash and have continued to grow and create tremendous value. In 2000, three of the five largest publicly traded companies in the US were tech stocks – now all five are.

Even the Super Bowl ads that we like to ridicule have been tied to business models that have since led to the creation of great companies – trading stocks and online recruiting are big industries. The digitization of these and similar functions has resulted in extremely successful companies. However, this value was only realized in the following decades, when the digital infrastructure was introduced internationally and digital competence improved. These first movers could have achieved far more if they had focused on building effective businesses based on a long-term vision and a solid, unified economy. Instead, they are notorious for being caught up in hype bubbles and influenced by high valuations inflated by immature investors.

Fintech and the crypto room

Something similar can be observed in the fintech and crypto space. That story is also fraught with a crash, as the 2008 financial crisis and the collapse of Lehman Brothers left a crowd of young, smart financial professionals suddenly looking for work. Up-and-coming fintech startups picked up the talent and created a fintech boom in clusters within financial capitals, including New York and London. Technologists and mathematicians have redefined finance at an abstract level and recruited financial “masters of the universe” to complete the vision and build businesses.

The combined talent of these two groups, coupled with the experience of two crashes in a decade and a half, led the fintech industry to take a pragmatic approach to growing businesses and construction products. As investors cooled down on technology, fintech entrepreneurs had to relentlessly focus on product / market viability in order to grow their startups. This was repeated repeatedly when new financial products and markets were built according to initial principles. This led to the creation of a stable ecosystem where ratings were based on reality rather than charismatic founders and growth fantasies.

The other financial milestone of 2008 that the history books will recognize was the creation of Bitcoin (BTC). When the pseudonymous Satoshi Nakamoto published the Bitcoin White Paper in October of this year, he or she looked past the ruins of the financial system and imagined a new one based on blockchain technology. This store of value, based on memory and removed from a central authority, was intellectually elegant and was at a crucial point in technological development and financial instability. Many thought the stage was ready for Bitcoin to take over the world.

But there was a problem. While some of us saw an asset class with tremendous social value, far more saw nothing but an asset rising in price, and others saw a Ponzi scheme. Satoshi built an amazing system, but its real worth had yet to be realized.

We know what happened next. Bitcoin became a speculative asset that appreciated in value in 2017 and resulted in eerily similar behavior to the Super Bowl ad blitz with bitcoin mortgages and blockchain iced tea. Then the price cracked and ushered in the crypto winter. Just like the realizable ideas of the dot-com madness, a fundamentally strong idea was lost due to poor communication, tight infrastructure and a lack of product / market adaptation.

As we’ve seen in the broader tech ecosystem, things change over time. Today we have a wide range of products, functions and currencies based on blockchain technology and designed for the crypto winter like the fintech companies of the last decade. This is backed by a sophisticated class of investors who give the blockchain a clear rating. Extensive quantitative easing and volatile fiat currencies due to the COVID-19 pandemic show the real value of the blockchain. It’s time.

The global financial system as a whole is a demonstration of a suitable product / market that is suitable for blockchain. Bitcoin’s hype exceeded reality and damaged the reputation of the sector for several years. However, now we have the infrastructure, expertise, and demand to realize the potential of the technology. The key to reaching maturity will be realizing the social value of the blockchain – how it empowers people – rather than just viewing it as a financial instrument.

The views, thoughts, and opinions expressed here are the sole rights of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Andrew Kessler is the Chief Technology Officer and Co-Founder of Zenotta. Andrew is a technology entrepreneur and cryptographic generalist. He won first prize in the IDC Inventors Garage, was a finalist in the GAP innovation competition, a finalist in Seed Stars, and a TIA scholar. Kessler from Zug is a serial entrepreneur who worked on an N-doped diamond-based semiconductor startup and founded several other startups focusing on biometrics, logistics and human identity. Andrew has a background in chemistry and biochemistry and has a strong knowledge base in cryptography.