Key takeaways
- When new innovations and trends catch on, we always overestimate them early on, then underestimate their potential effect over the next 10 years.
- Currently, Blockchain and its innovative cryptocurrency, Bitcoin, is on this trajectory.
- The Super Credibility Curve explains this phenomenon very well. Bitcoin probably hit the Peak of Inflated Expectations last year and now it’s sitting in that Trough of Disillusionment.
- At some point in the future, Bitcoin will make its way back up along the Slope of Enlightenment and level out at the Plateau of Productivity.
- Many new applications for Bitcoin and other cryptocurrencies are coming out everywhere. Wait a year or two before getting seriously involved.
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10.” That’s a quote from Bill Gates. And Blockchain, in particular, illustrates this phenomenon. In the past, a lot of other things like railroads in the 1830s, dotcoms in the late ‘90s, and many other innovations follow this path of early overestimation and then later underestimation.
The Super Credibility Curve
I have a simple graph to share with you that explains how this works: it’s called The Super Credibility Curve. On the vertical axis, you have levels of Expectations and on the horizontal axis, you have Time.
As time goes along, there’s an initial innovation trigger at some point. With Blockchain, that trigger was cryptocurrency in the form of Bitcoin. Expectations for the innovation become way over-inflated as it rises to this first peak. This may be what happened with Bitcoin last year when it rose way up to almost $15,000. Then it makes a sharp drop down into this low point, the Trough of Disillusionment, which might be where Bitcoin is now at around $3,000. Eventually, it will begin to recover along this Slope of Enlightenment before leveling out on the Plateau of Productivity.
Blockchain is with us and it will recover from the disillusionment at some point. But what is it, exactly? Let’s make it easy. Do you fully understand the internal combustion engine in the car you drive? Probably not. What you do understand is that you get in your car, turn the key, and the engine starts. Then you use the gas pedal, brakes, shifter, and mirrors to drive it. That’s all you really care about—driving it.
Let’s try to make Blockchain as simple as that. Basically, it’s a new way to look at the value of things. It gives you a new way to transact business with others. It’s essentially an immutable, distributable ledger. I wouldn’t go beyond that.
Where is it applicable? One of the areas it’s currently developing is in real estate. Here’s how it works: you might take a piece of real estate and break it into a bunch of tiny parts. Then you could invest $100 in one of those parts, for example, and still remain liquid. This means all parties involved agree day-to-day on the value of that piece of real estate. You could buy it and sell it in what is a liquid form, even though it’s an illiquid investment. And just in case you were wondering, you’d receive a security token when you invested in the piece of real estate. The security token represents your ownership of an asset in the real world.
When I attended the recent Abundance 360 conference, they showed us a few examples of these applications for Blockchain and cryptocurrency. There are a lot of these being applied in countless areas. Wait a year or two before you get really serious about it. Bitcoin will be rising up that Slope of Enlightenment sometime in the future. Until next time, enjoy.
Gary
