Olga Zeveleva
December 2017.
67

Why do people seem to know so little about blockchain technology, given the hype around it?

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I think this is a pretty common phenomenon with major technological breakthroughs. You see something new that’s radically different and captures people’s imaginations, it’s not well understood, and people are rushing to do something with it before properly understanding it because of the fear of being left behind. Either the price of it is going up, like with bitcoin, or it promises something that is really attractive, in a “fountain of youth” kind of way. Or, possibly, there is a limited supply of it, so you better get in before the opportunity is gone. Some of the principles at work here are not so uncommon; they are not so different from what we have seen historically.

Importantly, blockchain is a technology, and many people have a hard time wrapping their heads around new technologies, especially complex and radically different technologies like blockchain. At the same time, there is a monetary component to blockchain, and I have found in my years of teaching this subject that the vast majority people - and not due to any fault of their own - don’t really understand money.

How money comes into existence is not something that’s taught in secondary schools, let alone many Economics 101 courses; it’s something that is taken for granted. I ask audiences that I’m lecturing where they think the coins and banknotes in our wallets come from. Some people say, “they come from central banks”, which is true. However, what most people don’t know is that these central bank notes and coins are a tiny percentage of our money supply, 5% roughly in most countries. The other 95% of our money is mostly created by private commercial banks when they make loans. That’s not a widely known fact. So people already have a hard time understanding money, and then layered on top of it we have this new technology called bitcoin and blockchain, and people quickly get lost. But at the same time, the pace is moving fast, and there is a fear of missing out, and so it’s creating this kind of frenzy right now where people are like “oh my, I want a piece of this!,” and they don’t understand what it is.

Garrick Hileman and Michel Rauchs released the 2017 Global Blockchain Benchmarking Study, which can be downloaded as a PDF here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3040224.
You can read the brief summary of their study here: https://insight.jbs.cam.ac.uk/2017/central-banks-are-trialling-blockchain/
The above interview was conducted on 12 December, 2017.

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