Now that the biggest wave of hypes around Blockchain (and Crypto Currencies) is over, it is interesting to review what caused these hypes to be so explosive and also so misleading. Why does this matter? The next hypes are already building and a critical constructive review might help us identify overly hyped context earlier and become more proactive in spreading realism in a world driven by popularity and preferences over facts and functions.
Once we take a closer look at the influences and causes of the hypes around blockchain and crypto currencies, it becomes clear that there isn’t just a single cause that can be identified as the initiator of the hype. There is a combination of causes and influences that were waiting for the spark that ignited them. And when that spark came, it ignited them all in the biggest hype we have ever seen about something which is basically “just software”.
For several years Bitcoin was just a crypto geek thing for people who believed in a new future of bank free cryptography based currencies which would create a bright and profitable future. Although nothing big was happening, they believed that Bitcoin would conquer the world and set us all free. Introduced as concept in 2008 by the mysterious Satoshi Nakamoto and actually launched in 2009, Bitcoin remained a geek thing of relatively low value. Until 2017 and the hype drove its theoretical value through the limits.
Record after record was broken and profits kept growing. Everybody wanted in, everybody wanted a piece of the cake. Bitcoin trusted through the $ 1,000 barrier in 2017 like it had never existed and reached the $ 10,000 barrier in less than a year. Onward and upward, there was no limit to what Bitcoin could do, and everybody suddenly was an expert on telling the world that there was no limit to what Bitcoin, Crypto Currencies and Blockchain could and would do. The hype was born!
The immense and unlimited profits made on Bitcoin created a wave of attention for spin-offs and copies, and wave after wave of new spin-offs and copies. And of course countless Blockchain platforms and predictions of what could all be achieved with these.
Some spin-offs already existed before Bitcoin even started to get attention, and there are even blockchain based platforms and components used in crypto currencies and blockchain platforms which already existed long before Bitcoin was even launched. Like for example the Reusable Proof of Work and b-money, but they never got real attention until the world became aware of the potential profits spotlighted by Bitcoin.
New coins, new exchanges and new platforms were announced on a daily basis, and one was even more capable than the other, or at least that is what the fancy announcements told us. And even when most of the latest-greatest new coins and platforms never left the pilot phase (and a significant share of them never even entered the real pilot) and a lot of them have already vanished completely, there are still more crypto coins actively being traded than that there are registered credit card platforms. Cryptowatch already tracks more than 500 different coins which is still not all of them, while we have less than 100 credit card platforms worldwide.
Mining farms were created in abundance to make money on all thinkable crypto coins and blockchains. Because the real money (and costs and squandering of energy and resources) lays in the mining of coins to feed the chains, not in the chains itself. Companies we might have never connected with blockchain and crypto currencies jumped on the bandwagon in an effort to cash in. Remember Kodak? Yeah, they used to make cameras and films. Kodak launched its very own KodakCoin and an obscure device with even more obscure business model called KaskMiner to mine Bitcoin. Despite device, business model and coin being flawed and by now vanished into thin air just as fast as they emerged, the news that Kodak entered the crypto and blockchain market made its stock go up 120% almost overnight…
Profits and the hope of getting one’s share of them created a fictional world in which everything soon would be either crypto currency or at least blockchain. You have to give credit to the advocates and salesmen and saleswomen of these story lines, because they wend down very well and were swallowed by the masses as indisputable facts. The hype kicked in overdrive!
With the growing hype of seemingly endless profits and growth of crypto currencies and blockchain, a new vehicle of predicted profits emerged. The Initial Coin Offering (ICO). Speculators found a new way of speculating on the hype with ICO’s. Away from the regulated ways of raising funds and trading shares, the ICO’s offered a crypto currency based way of speculating on a prosperous future of whatever company that launched using a crypto coin or at least some kind of blockchain.
Riding the second wave of hypes around blockchain and crypto currencies to the fullest, it was close to impossible to keep up with all the ICO’s, and even more so, impossible to sort the corn from the weeds. The potential (and obvious) risks of unsubstantiated claims were overshadowed by the promise of profits and the predicted bright future of everything related to blockchain and crypto currencies.
A new phenomenon emerged. Among the many empty and sometimes even deceptive avalanche of ICO’s there actually were some very good and very promising platforms launched which should have deserved the full attention of serious investors and venture capitalists. The challenge these real innovators were facing was that their lack of willingness to promise endless wealth to their potential investors didn’t go down that well with those investors. Investors, or to be more precise the speculators, were looking for fast profits. Why invest in a promising innovative platform when the fancy hyped alternatives promise enormous returns within months?
The wave of ICO’s kept overflowing the markets until two events put a lit on it. The downfall of Bitcoin and all its crypto siblings in the second half of 2018, better know as “crypto winter”, and regulators starting to clamp down on the unregulated “wild west” of ICO’s. Some regulators opted for restrictions, others opted for embracing the new developments in regulations. The combination of the downfall and the regulatory response has led to a downturn in ICO launches but for a period of roughly 2 years, the ICO’s drove the wave of hypes and contributed to the hypes around Blockchain and Crypto Currency.
At the height of the hype around Blockchain the hype was even more enhanced by the fear of missing out (FOMO). Blockchain was all around and everyone had to be in or else. Advocates predicted that companies that didn’t join the digital transformation powered by blockchain would be left behind as relics of the old times in the coming decade, if not sooner.
CEO’s started to express their visions of a blockchain powered future for their companies. Annual reports charted roadmaps for the blockchain enabled growth. Digital Transformation with Blockchain had to be mentioned and communicated. Nobody wants to be left behind as a relic of the past, right?
My personal highlight (or should I say lowlight…) of FOMO was when the CIO of a well know international enterprise wrote me “The board wants an analyses of blockchain for our company. Can you give me a rough estimate of the full-time-equivalents we can cut and also some indication of common license models for blockchain? And I also want to know how this interferes with the cloud.”. To me this sums up FOMO and the lack of critical thinking when hypes start making big waves. I kept this email in my archive. You know, as a relic of the past!
Elections are won or lost through the right or wrong usage of Social Media. Facts are no longer relevant when relevance is created through likes and shares on social media.
Technology is everywhere as soon as it reaches trending levels at Social Media. Even when some developments are only marginally deployed in the real world, they are the only thing that is happening according to the Social Media “experts”.
The same happened with Blockchain and Crypto Currencies. On every thinkable Social Media Platform the hashtags #blockchain, #crypto, #cryptocurrency and #bitcoin were trending and stayed trending. Individuals and agencies working as so called influencers pushed one post after the other about the wonders of this new blockchain enabled world that was just years or even months away, or better yet, already all around us.
Trends on Social Media mean popularity and for many people, popularity is what Social Media is all about so they share whatever is trending. Copied from others. Copied from websites. Copied from news outlets. No need to understand what they are posting as long as it is trending, gets likes and shares. The trend itself became trending, attracting even more people and companies.
The impact of the hype, Social Media and the Influencer Effect became full circle when Social Media platforms started to announce their own versions of blockchain based editions and crypto currencies. The Hype was hyping the hype…
In this flood of unqualified and deceptive information on social media the real experts of blockchain were covered in contradicting posts, discussions with disciples claiming to be evangelists and a never ending stream of information that had to be analysed and digested but with the pace of likes and shares was already trending before one could finish reading it.
Influencers were once those who try to sell products and services on Social Media or promote sponsored content. Now Influencers were simply those who post the most and get the most likes and shares on their posts. Expertise and experience became irrelevant and still are.
Selling your name and your face for the right price is what we call sponsored advertisement. Celebrities have always been willing to appear in ads for the major brands and make a nifty living of the incomes. Good for them! Of course bitcoin and the likes found plenty celebrities willing to promote their coins and platforms. In addition to that, those who made a fortune in the beginning of the wave became celebrities themselves and promoted to wonderful world of crypto currencies and blockchain whenever and wherever they could.
It’s a business model, and a good business model needs marketing and branding. Bitcoin’s branding was driven by the mysteriousness of its founder(s) Satoshi Nakamoto, the immense profits before its value collapsed and its controversial attack on everything related to fiat currencies. And of course its popularity among those who discovered that Bitcoin is a great way to outrun regulations like AML and KYC…
Other stars of the crypto and blockchain universe needed support from celebrities to be known and reach fame (and fortune) in what seems to be a daily shower of new launches and announcements of tomorrow’s launches. John McAffee, the founder of a security company carrying his name, was for example more than willing to sell his name and face to announce the latest greatest coin or ICO. And for the right price, he was also willing to predict what the value of those coins would be in the near future.
Much more elegant and sophisticated are the blockchain promotions by those who made a fortune on the platforms in the beginning and predicted the blockchain based future of our society. Bill Tai is one example of these crypto / blockchain celebrities so let us have a look at what he has to say in this promo.
The amount of discrepancies and controversial statements in this promotional interview is so huge that the next part of Blockchain after the Hype will be dedicated solely to this video.
The one message that almost everyone kept broadcasting, and some still do, is that blockchain and crypto currencies are alleged to be unhackable. Even though blockchain definitely offer several aspects that make it at least very difficult to hack blocks on the chain itself, it surely is not impossible. But the much more important message is that it isn’t even necessary to hack the blockchain itself.
Exchanges, wallets, interfaces to and from the real world of systems and data are the easy targets. Fort Know was never robbed, but transports were… Writing an article on the likely attack vectors of blockchain platforms under the title Can blockchain be hacked? led to bashing of the author by “experts” and their followers, and many peers in the industry have made the same and even worse experiences.
Blockchain is unhackable, the influencers who have never designed, studied or even used a blockchain platform, other than maybe get paid for their services in Bitcoin, said so themselves so it must be true. The created hype got on overdrive by all the predictions of what blockchain would do for cyber security and against hacking, because blockchain is unhackable… Everyone who is willing to inform themselves knows better by know, but the unhackable legend continues despite overwhelming evidence of the contrary.
Hardly anything has been as hyped as blockchain and crypto currencies have been. A royal wedding or a presidential election might get similar attention for a while until it fades away into oblivion again. The hype around blockchain and crypto currencies lasted almost 3 years and is still fighting against its journey into the void.
Hyped elements were stacked together. Influencers and attention seekers responding to a growing trend, the trend attracting more of the same. The sudden outburst of profits on Bitcoin and its siblings kept putting oil on the fire. Profiteers and speculators finally getting the access to common people at a level that hasn’t been reached since the dotcom burst. The Fear of Missing Out driving enterprises to rush forward with announcing planned blockchain implementations.
All of this created a hyped hype in which Social Media not only provided the platform but also played a very active role with its algorithms pushing content based on popularity over value.
We see similar things happen with other topics. A search of social media on the hashtag #cloud might give the reader the impression that everything is either already transferred into the cloud or on its way of being transferred there soon. In reality, cloud is merely 3% of the global IT spending and slowly growing. Cloud technology will definitely be the dominating technology in the future but is surely isn’t at the moment, despite Social Media and the self-proclaimed experts and advocates trying to let us believe otherwise.
Politics is another area where hypes overtake value and facts like there is no tomorrow. The conversations and arguments about who influenced what election and how will most likely only fade with the next election, yet the actors purposefully ignore the fact that they did and do themselves whatever they can to influence the trends on Social Media.
Elections are won or lost through hypes, popularity and Social Media. And if there is anything that the Blockchain Hype has showed us, then it is that being popular is significantly more important than being truthful.