Crypto technology is still in its early stages, and it will stand up to the test of time. So says Noelle Acheson, head of research at CoinDesk and Genesis Trading. She explains that it can take decades of evolution before the technology reaches a mass global scale. Cell phones are a good example. Motorola invented the first in 1973, but it would be 21 years before the first “smartphone” arrived in 1994, and the first phone with a camera only appeared on sale in the year 2000. The smartphone as we know it today, with internet access, appeared in 2001, 28 years after the first call was made from a cell phone the size of a brick in a street in New York.
In this way, technology has demonstrated that those who succeed are those whole capable of taking the time to evolve. “ ARPANET, the precursor to today’s internet, sent its first message in 1969 – html and the first globally accessible websites didn’t appear until 22 years later,” Acheson explains. “ 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,” she adds..
From the “big bang” to phases of evolution
Although part of society has taken a pessimistic attitude towards cryptocurrencies, the reality is that “predictions” of their disappearance have not been fulfilled. The end of crypto is often announced, but it never comes. In fact, the “death” of Bitcoin has been decreed at least 469 times, and yet its evolution continues.
On this topic, the historian and economist Carlota Pérez have explained the cycles in technological adoption, detailing the way in which an invention comes to reach majority use. She developed a theory that divides the history of technological advances into five waves. Each one of these began with a “big-bang”: a disruptive technology that changes the game.
Each wave comprises five phases. The first is installation, in which infrastructure is constructed and procedures are designed. Everything is created from scratch. Then comes the phase of expansion, in which the technology becomes more widely adopted. Regarding cryptocurrencies, Pérez says: “ Obviously, we’re a long way from generalized adoption: we can’t even agree on what such a thing would mean. Not only are we still in the initial phase of installation, but we’re still trying to establish a new technological base via fragmented initiatives that chase emerging use cases in a fragmented international scenario ”.
Pérez adds that new technology in finance can take longer to evolve because there’s more risk. A new ecosystem can be seen as a threat by those in control, and curious investors may fear the unknown, slowing down mass adoption.
Nothing evolves without a “crash”
Periods of installation tend to last between 20 and 30 años and to culminate in a crisis, which is the third phase. This breaking point is what generates the changes that are needed for the technology to endure in the longer term. For example, if the crypto winter was the necessary crisis to enter the third phase, the new cryptocurrencies could be the answer to this crisis: crypto backed by real assets, reducing the amount of volatility and offering security for investors. This takes us, then, to the fourth phase: synergy. Here the market innovates and expands, new systems are introduced and existing ones are updated in order to take the technology to maturity, which is the final phase.
Pérez concludes her theory with the phrase “nothing important happens without a crash”. For those who ask when crypto will no longer be something new, her answer is that this will happen when the dominant current becomes centered as much on adoption and new applications as it does on changes in the price of assets.
Another sign that it’s become established would be when the technology no longer intimidates those who are curious about crypto and becomes more accessible. The third factor that will define its future success will be when “regulators see new financial applications as opportunities rather than threats”.