How the evolution of crypto currencies will change the future of business and politics
Network effects and the coin market
The key for a successful business model and with it the change in behavior is an interface that is easy to use. This has been shown over and over again by sites such as Google with a simple search bar and advertising that was pretty hard to distinguish from normal search results or Facebook, which lets you believe that real-time global visual and verbal interaction is the most natural thing in the world. One key aspect behind the success of those two companies, which owe their success to the invention of the Internet is the fact that they are natural monopolies. Much like building a parallel train track next to an already existing one doesn’t make a lot of sense, there is not much need for another search engine or social network, when the already existing one is the most innovative, fastest and user friendly one. So the Blockchain that will prevail in one specific industry needs to aim for monopoly and needs to invest in programmers to make it easily usable for the common people. After all, the retail clients are where the money is to be made.
The transformation process
Currently there are around 760 different crypto-currencies with differing applications available and several new ones being added on a weekly basis; the most famous one (to the public) still being Bitcoin. With the start of the Ethereum Blockchain the next level of innovation has become reality. Why? Because with this particular Blockchain you can develop working business models by using applications. We are talking of nothing less than the invention of a new network similar to the Internet. The spike in prices, which is often denounced as an asset bubble, resembles the dotcom bubble of the 2000s in a stunning manner. It’s obviously impossible to project which company will be the next Google or Amazon on the Blockchain or even if the Ethereum Blockchain will be the prevailing one but the innovation within it tells us that the technology is here to stay. Of course, it is very unlikely that there will remain several hundreds of different coins with comparably high transactions and exchange costs when moving from one coin to another. So the ultimate goal or differently put the result of all this emergence of different currencies will be one single coin, possibly with several subcoins, which can be combined in one single user interface so that even your mother can use it. Those subcoins will be developed specifically for different purposes of similar nature. There are already different coins that have been developed to solve problems that currently still exist but have not yet been addressed or cannot yet be solved. Let me give you some examples:
Currently you are offering services free of charge on the Internet even though you are using your precious time that you could be using to earn money. You are still willing to do that for free because you get something in exchange: recognition through comments and likes. This, however, will change when you realize that there could be a business model behind it and you could get paid for your online services. Be it that you get a small amount of money either financed by commercials displayed on specific websites for your yelp review (reddcoin) or financed by the inflation of the currency created for the purpose of writing articles (Steem). Another example would be the emergence of the like of Acebusters, a decentralized poker website using smart contracts. Their economy is aiming to use a new coin called Nutz for a fair poker game solving the mental poker problem on the Blockchain. Hence, there is no central counterparty (except for a transparent smart contract) that can neither take the money from your poker account and take off with it nor shuffle the cards in a way that is only favorable to the poker website. There are many more examples but I think you get the idea: The technology can solve existing problems!
Policy coins
As already mentioned, with the development of Ethereum we now have a Blockchain that can be used as a decentralized network with the ability to build applications (i.e. businesses) on top of it. This is important. Unlike the Bitcoin Blockchain, which serves the single (real life) purpose of anonymous payments (apart from the great technology behind it), we now have a new network similar to the invention of the Internet. There are lots of scams among the newly created coins. Some, at first sight at least, do not offer any additional benefit to Bitcoin. Potcoin is one of those examples. But Potcoin has a hidden benefit difficult to detect at first sight. It is a tool to transport a political message. In this case the coin propagates the legalization of marijuana. At first sight this seems like another nonsensical approach of some stoners protesting for their weed. But it actually makes a difference. Instead of forming a Facebook group in favor of legalization or protesting on the streets, this actually has a real-life application to it, i.e. paying for weed in States, where it has been legalized and giving some normality to it. This means transforming the legal purchase of marijuana into the new status quo and forcing it onto the political agenda instead of just asking some politicians to do so for them. This logic could also be applied to other policy areas like gay marriage (with a gay coin or with marriage on the Blockchain as available in Estonia) or even abortion (with a sort of planned parenthood coin paying for medical treatment). As with the Internet, Blockchain is here to stay and it will bring the world closer together and change the future for the better. I for myself am looking forward to it.