Eoin Treacy's view

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Last year marked the pont at which that narrative finally collapsed. The existence of internet skeptics is nothing new, of course; the difference now is that the critical voices increasingly belong to former enthusiasts. “We have to fix the internet,” Walter Isaacson, Steve Jobs’s biographer, wrote in an essay published a few weeks after Donald Trump was elected president. “After 40 years, it has begun to corrode, both itself and us.” The former Google strategist James Williams told The Guardian: “The dynamics of the attention economy are structurally set up to undermine the human will.” In a blog post, Brad Burnham, a managing partner at Union Square Ventures, a top New York venture-capital firm, bemoaned the collateral damage from the quasi monopolies of the digital age: “Publishers find themselves becoming commodity content suppliers in a sea of undifferentiated content in the Facebook news feed. Websites see their fortunes upended by small changes in Google’s search algorithms. And manufacturers watch helplessly as sales dwindle when Amazon decides to source products directly in China and redirect demand to their own products.” (Full disclosure: Burnham’s firm invested in a company I started in 2006; we have had no financial relationship since it sold in 2011.) Even Berners-Lee, the inventor of the web itself, wrote a blog post voicing his concerns that the advertising-based model of social media and search engines creates a climate where “misinformation, or ‘fake news,’ which is surprising, shocking or designed to appeal to our biases, can spread like wildfire.”

For most critics, the solution to these immense structural issues has been to propose either a new mindfulness about the dangers of these tools — turning off our smartphones, keeping kids off social media — or the strong arm of regulation and antitrust: making the tech giants subject to the same scrutiny as other industries that are vital to the public interest, like the railroads or telephone networks of an earlier age. Both those ideas are commendable: We probably should develop a new set of habits governing how we interact with social media, and it seems entirely sensible that companies as powerful as Google and Facebook should face the same regulatory scrutiny as, say, television networks. But those interventions are unlikely to fix the core problems that the online world confronts. After all, it was not just the antitrust division of the Department of Justice that challenged Microsoft’s monopoly power in the 1990s; it was also the emergence of new software and hardware — the web, open-source software and Apple products — that helped undermine Microsoft’s dominant position.

Find a gap in the market, or a problem that needs to be fixed, and solve it has long been the maxim entrepreneurs follow. There is no doubt social media is both a boon and curse for many people most especially the young. My wife and I were at a friend’s house for New Year’s Eve and their early ‘20s niece was hanging out with some friends before heading out to a party. They were all sitting in a circle, bedecked in holiday finery, with heads down staring at group chats they were all a part of until they decided where to go first which seemed to be an interminable process. They eventually left the house at 11:30 to go to a party. To my eyes this seems like an odd way to live but then I am twenty years older than they are.

The larger point is that in an age where we are assailed with automation and innovation, our individuality is one of our more prized possessions which we all too cheaply share with all and sundry by engaging with the internet. Awareness of the value of this person asset is still low so there is no groundswell of support for change. Since the value of our personal information is most acute for us as individuals, there is no monetary value to it unless we are willing to share it. Technology companies would argue that we get a substantial value from search engines, shopping sites and social media in return for the marketing we accept in return and there is a certain amount of truth to that. The hard fact is that companies will always find a way to market to consumers and if not through social media then a way will be found through the blockchain.

The fact that around 10% of cryptocurrency wallets have been hacked and stolen from is not a comforting statistic for those proselytizing the rise of cryptocurrencies, yet blockchain does have real world applications. IBM is working with Maersk to streamline global logistics using the blockchain. This is a real-world practical example of how the technology can be used to help businesses reduce costs. This application of the blockchain is not especially reliant on the monetary value of the underlying block token and that is perhaps the most important point of all. The monetary reward for mining has not yet been commoditized but it will be if blockchain does in fact become more widely available. That is the nature of technological evolutions.

Right now, there is no killer blockchain app that solves for all problems. Eventually there will be and the vast majority of investments in the space will be worthless. The number of companies that survived the TMT bust from the bubble peak in 2000 is comparatively small. Amazon is the most notable success story, Google didn’t even IPO until 2004 while Facebook only started in 2004. The technology behind blockchain is evolving at blinding speed with proof-of-work (mining), giving way to proof of stake (landlords) which is now being challenged by Directed Acyclic Graphs (DAGs) which eradicates the need for miners. 

I believe blockchain will evolve to become an important part of the global financial architecture but most of the coins minted in the last years will end up being worthless.