Fast forward to December 2017 and the order of magnitude increase, with over 1300% ROI in 2017 alone, appears decidedly hallucinatory, but even that is nothing compared to the estimated $200,000+ peak valuation predicted by the time the last of 21 million possible bitcoin has been mined. According to the maths, even if you were to invest in bitcoin at $10,000 or $20,000 you'll still stand to make an order of magnitude return on your investment well before that last bitcoin is mined! Such irrational exuberance, fools gold and / or mega bubble surely challenges previous examples, (e.g.: the infamous Dutch tulips, South Sea bubble or dot com bubble), for supremacy in foolhardiness, or does it?
Anyway, instead of all that hand wringing speculation, this three part post (from a forthcoming article for ITNow magazine) will focus on the perfect storm that has brought things to this point (in Part 1); it will explore current and emerging trends (in Part 2), and discuss possible scenarios that will likely play out after the dust settles (in Part 3), before concluding with a few recommendations on the way forward to the world beyond the blockchain.
The winds of change - key Ingredients for the perfect storm:
We can acknowledge that bitcoin is the first and perhaps most disruptive application of the blockchain, at least for now. The following factors have combined to drive its emergence as a jaw dropping speculative investment opportunity, and the underlying blockchain technology as a revolutionary engine for hyper-charged innovation:
1 - Technology drivers:
- According to CBIsights Research, bitcoin is the first decentralised, censor-proof, portable, secure, durable, and scarce digital asset.
- The underlying blockchain is built on a solid foundation of proven technologies including public key cryptography, hashing and TCP/IP (aka the internet protocols).
- The blockchain is one of several disruptive technologies that will enable and drive the so-called fourth industrial revolution.
2 - Global socio-economic, political and demographic drivers
- Following 2008's financial meltdown, with subsequent financial reforms and various other aftershocks, many institutions, including banks and governments, are suffering a major 'crises of legitimacy' which is eroding their traditional role as trusted middlemen for many transactions
- Global unemployment, hunger, terrorism, wars, natural disasters and mass migration all highlight and exacerbate inequality, xenophobia, mistrust and dissatisfaction with the status quo.
3 - Geometric scale disruption
- The speed and scale of disruption and adoption of blockchain applications is phenomenal, and it challenges existing systems of production, management and governance
These key ingredients combine and contribute to the current frenzied interest in cryptocurrencies as well as the development of new, disruptive applications, business models and emergent behaviours powered by the blockchain. In the second part of this blogpost series, we’ll take a look at the emerging opportunities and challenges to be found in the eye of the storm.
