In 1962 E.M. Rogers introduced the world to the Diffusion of Innovation Theory, a framework to understand the adoption of an idea or product. It comes in five stages and it applies, generally speaking, to all disruptive technologies. While the Internet has spawned numerous disruptive innovations, the world has probably never seen anything like Cryptocurrency. A decentralized, uncounterfeitable resource would, on the surface, seem to be the Holy Grail that governments would embrace for obvious reasons. And yet, it wasn’t governments who invented the concept of national cryptocurrencies, but private citizens.
The first was introduced to the world March 2014 by a mysterious person named “Baldur Friggiar Odinsson” and was greeted with much-deserved skepticism. Ultimately Auroracoin fizzled and has become little more than a footnote in the history of the crypto movement. The Icelandic government never acknowledged it, much less supported it, and the cryptosphere largely ignored it as well. It currently sits at .93 USD with a total supply of just under 9 million units in circulation. Baldur, like Satoshi Nakamoto, has never stepped out of the shadows.
Hot on Baldur’s heels we saw another Fast Follower introduce a national crypto, Payu Harris. His creation Mazacoin, was ostensibly designed to benefit the Oglala Sioux Nation in Pine Falls, South Dakota. In theory, this would have been a boon to a population that could benefit greatly from the influx of investor cash but unfortunately, it also fizzled due to a combination of factors, including obscurity, lack of accountability, and an overabundance of supply. It currently sits at .0008 USD with a supply of over 1 billion coins in existence.
Then we saw Isracoin, which was supposed to benefit the people of Israel, through a detailed, highly-organized distribution system that was supposed to lead to widespread adoption. It has since vanished from the face of the earth.
And finally, we saw the first true national crypto as Ecuador announced plans to ban Bitcoin and introduce its own electronic money system. Unlike Bitcoin which is fully decentralized, Ecuador intended to marry this new system to the government-controlled dollar. The new system would be limited to residents and citizens and was intended to operate like Venmo where payments could be made not only on smartphones but on “dumb” cell phones as well.
By December 2017 there were 10 nations that had created or had plans to create their own Bitcoin alternatives. And all of those that had been introduced have failed which doesn’t inspire confidence for those in the planning stages.
What no one seems to be asking is why? Why has Dogecoin, Litecoin, and other decentralized systems seen tremendous success while these others have failed so completely? Logic dictates that a firmly established community employing people with advanced degrees and financed by taxation should prove stronger than a meme, but reality has decided that it doesn’t want to go along with that plan.
In the coming weeks, I intend to explore this and hopefully find answers.
In order to understand why an idea succeeds or fails we need to examine the circumstances in which it arrives into the world. Where, for instance, does it originate? Who is the innovator? What problem does this innovation seek to solve? And do the communications channels exist to allow the idea to spread?
I have previously used the example of the primitive steam engine that the Romans rejected as an example of an innovation that was too far ahead of its time. If it had been discovered a century earlier or a century later it could have been adopted, not because it promised to do away with slave labor, but in spite of that. If there is one trait that truly describes the Roman civilization, and the Caesars who ruled the Empire, it is a love of self-aggrandizement. Each ruler built something larger, more majestic than his predecessor so that everyone would know how wealthy and powerful the Empire was under their rule.
Consider for a moment that the Colosseum was built without the aid of steam-powered equipment. Using nothing more than muscle and simple machines like the block-and-tackle, pulley, and the sledge, this marvel of engineering is still impressive over 2 millennia after it was built. Thomas Homer-Dixon uses this structure as the launching point for his analysis of complex systems The Upside of Down, and I highly recommend you take the time to read it because the conclusions drawn from his research are staggering. If the Romans had not rejected this innovation there is truly no telling what they could have achieved. However, lacking the proper communications channels as well as a receptive audience, the idea was discarded out of hand.
This is not an isolated incident by any means. World history shows us again and again how ideas are introduced but not adopted, often for extremely arbitrary reasons. The usual cause is lack of information or the lack of communication channels to share the information. Still, even when such channels exist, when the information is there, the innovation is still not disseminated and adopted. For evidence, we need look no further than the eradication of scurvy, the cure of which was known as far back as 1507. And yet, the British Navy didn’t adopt the cure until the 18th Century because the Establishment rejected the idea that these low wretches on ships could possibly know what they were talking about.
It’s no different with cryptocurrency now, really. There are many ills that can be cured with uncounterfeitable, easily tracked tokens but the adoption of this innovation is being steadfastly opposed by established figures who have a great deal to lose. This is not to say that the growth of Bitcoin is being held back by a shadowy cabal of nefarious actors, although that is actually part of the problem, just not in the way most people would assume.
Crypto can make the world a better place, but to get there a few barriers need to be overcome first. And the first of these is the lack of information necessary to allow adopters to make an informed decision about the viability of this resource. And the great irony of the Information Age is that, while we now have access to more information than at any point in human history, we are continually drowning out the useful bits with the white noise of absolute idiocy.