I feel that any answer I give would be either over-selling it, or under-selling it. In a way, it’s like a subset of the impact that the internet had. The internet allowed us to communicate across borders and over long distances; a very well-defined global currency based on a blockchain could allow us to do transactions without borders and without having these governments tell us what we can or cannot buy. So in that sense, it sort of mirrors the internet’s free and open nature, and that is the drive within the community. If you go through the bitcoin forums, you’ll see that the people there are really passionate about having this decentralised system without having any censorship, without having any sort of borders, and that’s the sort of philosophy that the whole community comes from. I think they would like to see one global currency and we are all part of it, sort of like everyone is part of the internet… unless you are from China, but that’s a different story.
The internet gets mentioned a lot as a historical parallel, and I think that is actually a pretty good analogy for the blockchain phenomenon. 20 years ago, I was in San Francisco working at a tech incubator, so I was at ground zero during the internet phenomenon. People didn’t understand this thing called the internet; all these new businesses were being built, prices were going up. And then there was a crash, and a lot of companies were wiped out. At the same time, a few companies, Amazon for example, survived and flourished.
Between 1998 and 1999 Amazon’s stock price went up approximately 1400%, which is roughly equal to bitcoin’s price appreciation this year. While Amazon’s stock price, like most tech stocks, crashed in 2000-2001, the price has subsequently risen so much that the 2000 crash is now an unrecognizable blip on Amazon’s price chart. Bitcoin’s price chart, and the then big 2011 and 2014 price crashes, looks similar in many ways to Amazon’s. So not only is this an interesting comparison because these are technology-driven phenomena, but you also have similar price action with some of the longer-term winners, like Amazon, flourishing following a bubbly crash.
To me, that is a more appropriate historical analogy than, say, something like tulips, where the price went up and then crashed, and never really bounced back. Bitcoin’s price has gone up, crashed, gone up higher, crashed, gone up even higher, and now many people are expecting another crash. However, many people are becoming more familiar with Bitcoin’s resiliency following previous crashes, so if there is a big price correction I’m not sure we’ll see the same type of 90% drops in bitcoin’s price from peak to trough we’ve seen previously.
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.