In 2017 we are witnessing nothing less than the obsoleting of the old monetary and legal systems that have controlled society for decades and the rise of a far more decentralized and inclusive financial order.
Money – formerly the exclusive province of governments and banks – has finally broken free. We will soon see separation of money and state.
The WAVES platform has made token creation effortless. Sally, a 7-year-old, can go on WAVES and create 1000 SallyCoins. These new tokens cannot be counterfeited, they are a secure global crypto-currency which is already listed on the WAVES exchange. They can be immediately traded for BobbyCoins or AnnieCoins or Bitcoins or US dollars.
The crypto-currency arena has been a nerdy and experimental space full of trial and error, a wild west where hackers were trying to steal your money, exchanges were very risky and price crashes were common as many existential threats to Bitcoin and the alt-coins reared their ugly heads.
2017 marks the year when the technology has matured enough to go mainstream – the rise of crypto appears unstoppable.
Startup and project funding, an arena once tightly controlled by venture capitalists and banks has also gone free – first with crowdfunding sites like Kickstarter, but now moving into high gear with the amazing ICO explosion. An astounding $4 billion has been poured into ICO startups in 2017, easily leaving venture capitalists in the dust. We are seeing a Cambrian exploration of nearly every conceivable use for the blockchain getting its own startup and likely finding some working capital.
Particularly amazing is the self-fun ally radical changes in society must scramble for funds or bootstrap because the established players with all the money are naturally reluctant to fund ideas that may be disruptive to their business models. But the Internet of Tokens is different – it creates its own wealth.
The nature of crypto-currencies is that if you create say 1 million coins and sell a single coin for a dollar – your coins have now had a total market value of $1 million. You just made yourself a millionaire! Sort of. To make this work you need to have your tokens represent something of value to your community. Perhaps you can back them up with a product you make or a service you provide. If lots of folks are willing to buy and sell your tokens for a dollar, then you are well on your way to giving the tokens real value.
How do we know that this sector has finally come of age? Well for one thing the numbers are absolutely stunning. Bitcoin – the mothership token and crypto-currency – the invention that created the whole space – now has a marketcap of nearly $300 billion dollars. Getting off to a great start at $1000 per coin at the beginning of the year – it beat its all-time-high from 2013 of about $1200 by March – waking ordinary folks up to the fact that this currency was still alive and kicking. Many in the public thought that Bitcoin died back in 2014 with the crash of its most famous exchange – Mt. Gox, which had shepherded Bitcoin’s early growth.
Each time Bitcoin smashed through its records of $1000, $1200, $2000, $3000 and so on – it would result in a huge wave of media attention. Although the pundits nearly uniformly called it a bubble – like the boy who cried wolf – this “bubble” theory started to ring pretty hollow as Bitcoin blasted through one milestone after another. The rate of change seemed to be accelerating. For 2017 year to date Bitcoin, Ethereum and Litecoin experienced the stunning growth of 1840%, 8337% and 6606% respectively. Yes those aren’t typos, Ethereum actually increased by a factor of 83 times. An investment of $100 on Jan 1, 2017 would give you $8300s worth of Ether today.
The ICO market exploded too with a total investment of $4 billion and individual ICOs, even some with quite rudimentary proposals, bringing in 10s or 100s of millions of dollars.
Much of this ICO investment however, came from the windfalls from the astronomical rise of the earlier tokens like Ethereum. In this sense – the idea that investors are at great risk is silly – it was basically funny money arising out of the self-funding nature of the space being re-invested in new ventures.
The more the total market cap blows up, the more wealth there is to pay developers and entrepreneurs to explore even more of this Cambrian potential. Now we have half a trillion dollars’ worth of tokens to power the revolution.
It’s difficult to overestimate the evolutionary nature of transition we are entering now. What historical shifts were of sufficient magnitude to give us an analogy to the present moment ?
The crypto-currency space doesn’t suffer from this problem at all however. Just the opposite – it’s self-monetizing. So, the analogy to the dot-com era is weak.
> The next analogy we could make for this transition is the rise of the Internet itself. Crypto-currency has been referred to as the Internet of money, or more broadly the Internet of tokens.
One of the main qualities of the Net was that ubiquitous global networks enabled a dramatic decentralization of power and control. The rise of the Net carried us from an era of one-way mass media like TV, radio and newspapers to a far more decentralized mix of sources like blogs, YouTube videos, podcasts and social media. Facebook and many other social media sources give us in effect a Friends News Network with our friends acting as curators of information for us. If someone wishes they can have a free global platform, sharing whatever they wanted with the world. Information and communications were now bi-directional and in social media we were all basically on the same playing field.
The Net, by its nature – started eliminating one monopoly after another. We no longer used the Post Office to send routine messages; instead we used email. Replacing Encyclopedia Britannica was Wikipedia which was infinitely larger and constantly kept up-to-date by an army of volunteers.
The Net gave us global online marketplaces where anyone could buy and sell products without permission – like eBay. Airbnb enabled us to get around the hotels’ monopoly on overnight guests. Uber and Lyft ended our reliance on poor quality taxi services. Many of these new platforms allowed ordinary folks to earn income without necessarily needing 9 to 5 jobs.
The crypto-currency revolution is now using global networking for us to overcome the most important monopoly of all – the banking and financial system itself. Crowd funding and the ICO revolution gives us far more cultural and entrepreneurial options for what gets funded and what doesn’t.
So both the rise of the Internet, and the rise of Internet currencies share the core innovation of decentralizing control and decision-making away from the authorities and into the hands of ordinary folks.
Yet the Internet of Tokens can relate back to even more fundamental innovations in society.
> The year 1776 could be thought of as Decentralization 1.0. Thomas Paine’s “Common Sense” argued for the idea of government as a necessary evil, rather than a pre-ordained order. It was a rejection of monarchy replacing it with an emphasis on society and community. Paine states that all men are created equal and that kings present a false superiority. Paine was truly an early decentralist.
Adam Smith’s “The Wealth of Nations” was decentralization 1.0 for economics. He championed the notion that allowing men to pursue their self-interest – and creating whatever trades they saw fit, would act as an invisible hand benefiting the society as a whole. This strongly argued against central planning in an economy – something that would naturally interfere with the myriad of decision making processes that take place at the local level.
These ideas laid the foundation for the pluralist American society which lead to the explosion of progress and economic equality that characterized the radical experiment known as the US.
With the crypto-currency revolution – we are casting off another monarchy – that of our financial overlords who have managed to enslave us in a form of indentured servitude. 2017 signals the beginning of a new Enlightenment of the magnitude of 1776.
However even this analogy doesn’t express the true depth of the pivotal transition that is ground zero for us now. The rabbit hole goes even deeper.
> It’s not often expressed but Satoshi Nakamoto’s great invention was the birth of the first permanent digi
tal objects known as the blockchain. Normally we think of data on a computer as just a bunch of ones and zeros that could be wiped out when we turn off the computer or modify a file. We don’t ordinarily think of anything digital as permanent or unchangeable.
Satoshi brilliantly devised a system where any digital information could be stored and replicated on a global network and by using advanced cryptographic techniques – make the data permanent and unchangeable. This permanent, write-only data structure is known as the blockchain.
It allows any group to establish a set of shared “truths” in such a way that they become a permanent shared record that nobody in the group can alter. In the case of Bitcoin – the shared information is simply a record of who has how many bitcoins in what addresses. In fact, it’s a chain of blocks recording all the transactions in the system since the genesis block (the first block).
But I was actually wrong to claim that Satoshi invented the first permanent digital object. In fact the first digital object was invented 4 billion years earlier. It’s called DNA. The point of DNA is that it forms a digital (base 4) memory of molecular construction that is preserved over time and can be replicated to produce an unlimited number of identical organisms. Like a very slow blockchain, it also undergoes progressive accumulation of new information.
Once we realize that we have suddenly discovered the new DNA for the silicon world – we can see that we are at the precipice of an incredible point in our societal evolution. Each new blockchain is like a different species, and forks are analogous to divergence of species in biological evolution. Just as the DNA in cells and multi-cellular units establishes a common reference point between numerous independent organisms, so too does the blockchain unify millions of independent software clients.
The coming of age of Bitcoin portends a massive step forward for mankind rivaling the invention of life itself. We can safely conclude that the next few decades will be exciting indeed.