Historical past is filled with firms that missed out on huge technological modifications. A lot of them thought they have been rigorously timing their participation available in the market, however I imagine they might have been trying on the mistaken measures of adoption and consequently made the mistaken selections. That sample is about to repeat itself with blockchain. The difficulty right here is that in relation to know-how, the battle over requirements and market management is often determined earlier than mass adoption.
The result’s that by the point most firms discover that the market is getting into a mass-adoption part, it’s too late to vary the course of the market. The marketplace for private computer systems arguably began in 1977. A decade later, in 1987, lower than 15% of all American households had a private laptop, however by then, Microsoft Home windows was the market chief with greater than half the market. (Nice perspective from Asymco.com here and here and here.)
Paul Brody is EY’s World Blockchain chief.
The sample repeated itself within the smartphone class. Nokia could be mentioned to have kicked off the market with the Symbian ecosystem in 2000. E-mail-focused smartphones adopted in 2003 after which touch-based smartphones in 2007. By 2011, despite the fact that adoption was nonetheless lower than about 20% of the market, we already had the identical two market leaders we all know immediately.
The sample seems to have largely repeated itself on this planet of cloud computing and networking programs. Regardless that each markets are largely primarily based on open-source applied sciences and well-understood revealed requirements, they continue to be dominated by the unique leaders, even after a long time of decided and massive spending competitors. The market chief in networks has a 50% share, and the market chief in cloud has a 32% share.
And so there’s a lesson right here for the world of blockchain: Time is working out. That’s true for different blockchains, for legacy gamers, for everybody who isn’t already knee-deep on this enterprise to turn into a critical participant. Relying on the place to begin you choose (Bitcoin in 2009 or Ethereum in 2015), we’re seven to 12 years into this market growth. Estimates fluctuate, however the extra dependable ones level to between 8% and 10% of all Individuals already personal some cryptocurrency. The window to create a management place appears to shut round 10-12 years after a market is created, and so that point is close to, if it hasn’t already arrived.
Just how close we are to the end of the game can be hard to discern in the day-to-day fog of competitive warfare. Between 1985 and 1990, you wouldn’t have been in bad company if you had picked up a Commodore Amiga (as I did) or an Atari ST. In the mid-2000s, you were in similarly good company if you eschewed complicated touch screens for the reliability of a smartphone with keys.
Not only would you have been in good company for choosing different smartphones or PCs, you would have also been right in pointing out the enormous flaws in the market leaders. A black and white PC in 1985? Only 640 kilobytes of memory? The same kinds of absurdities can be found in the world of blockchain. The carbon footprint for Bitcoin and the transaction gas fees (the fee required to successfully conduct a transaction on Ethereum) can only be described as obscene.
These problems did not destroy their ecosystems, however. They got fixed, often imperfectly and with much grumbling, and people moved on. When PCs with extended memory arrived, the solution was criticized as a clumsy workaround. People bought them in huge numbers anyway. Expect roughly the same reception to any “solution” to Bitcoin’s carbon footprint.
I believe the dominant players in the world of blockchain are clearly visible now as well. Bitcoin represents a bigger market capitalization than every other blockchain combined and appears to be on track to become the preferred digital store of value. Likewise, Ethereum has more developers than every other blockchain combined, and is similarly on track to becoming the preferred economic infrastructure for the next generation of developers. At the same time, companies like Aave, Binance, Coinbase and Compound Labs are busy staking out the high ground in this ecosystem around specific value propositions.
I’ve spent five years at EY doing everything I can to make sure that we don’t just participate in this market, but that we lead it. I don’t think I will know if we succeeded for another decade, but I am sure that the critical time is now, and I find myself struggling at times to communicate to others my intense sense of urgency in a market that many think is just in its infant stages.
If there is one final reason to act with urgency, it’s not just that the window for market leadership is closing. It is also unlikely to reopen. There were better operating systems back in 1987 than the market leaders, and that was also true in 2000, 2010 and 2020.
The most astonishing aspect about market leadership in technology is how little it depends on the technology itself. There is always something better out there. The strength of the platform may have started in the technology, but in the end, it is much more driven by the total investment, the installed base and the developer community.
In the next year or two, you can expect many technology and financial services companies to explain their plans to enter the blockchain market. In nearly every case, they will cite the low penetration of the technology in their industry or market as evidence that it’s “early days yet” and they have “plenty of time” to formulate their strategy and leverage their legacy market position. It isn’t. They don’t.
The views reflected in this article are the view of the author and do not necessarily reflect the views of the global EY organization or its member firms.