Babies are not Born adults
World-changing inventions rarely arrive full-blown, having to go through any number of iterations and shakeouts before their full significance becomes glaringly obvious to all. Think of the early days of autos, when 99.9% of U.S. manufacturers failed; or the boom in personal computers in the early 1980s, which was followed by a massive wave of failures and led some to declare that PCs were no more than toys; or the spectacular dot-com bubble of the late 1990s, which led to a sensational bust that had many supposedly smart observers concluding that information, retail and social websites had no future.
Two things—one historical, the other current—recently brought all this to mind.
The first was prompted by a documentary (part of The Great War series on YouTube) about Germany’s belated attempt to develop a battlefield tank, the A7V, near the end of World War I. Nearly two years before, in 1916, Britain had introduced the first tanks—a handful—into battle. German forces panicked, never having seen such monsters before. It’s no surprise that the German high command initially went into a frenzy, ordering all-out efforts to produce a model of their own, as well as new weapons to neutralize the machines.
But almost as suddenly, these efforts were throttled. German militarists concluded that tanks were vastly overrated and not worth allocating a meaningful amount of scarce resources. The British and subsequent French tanks were all bark and little bite, as they were prone to breaking down; their speeds were snail-like, making them easy targets for artillery and even infantry grenade attacks; and they were cumbersome, getting stuck in trenches. In short, tanks were of little or no effective battlefield use.
But the learning curve in technology turns what looks messy and riven with shortcomings today into world-changing entities tomorrow. Allied tanks improved, as did the techniques for producing them en masse. By 1918 Germany realized it had made a catastrophic blunder. Too late. Sadly, Germany didn’t make that mistake again.
The second example is what’s currently unfolding with cryptocurrencies. This sector smells of fraud and scams. Bitcoin itself is way down from its highs. A massive shakeout, with lots of scandals, seems imminent. Governments, barely concealing their glee, are cracking down and conjuring up regulations to “protect the consumer.”
The skeptics will have a field day. But their criticism and scoffing will miss what’s happening: An entirely new worldwide ecosystem is emerging. Advances in blockchain technology will soon do to the global financial payments system what the internet did to traditional print media. And advances will be made in creating easy-touse cryptocurrencies that will be genuine— and better—alternatives to the government fiat currencies we have today.