The past weeks have displayed all the classic signs of a mania: wild price action, exchange regulation challenges, insider trading, fraud. The retail public has entered the market, and the least sophisticated levels of the public at that. Bitcoin investors should remember the real money made – and kept – from the 1999 – 2000 mania wasn’t from changing your company name to reference the latest trend.
Are we at a “top”? Shrugs. I’ve stopped predicting tops. It verges on predicting how much trouble your drunken friends can get into before sunrise. The answer usually exceeds your wildest expectation.
But yet… there are still opportunities here. We have a road-map from the first Internet mania.
First, like e-commerce, block chain is a legitimate business transformation opportunity. In simple terms, block chain reduces the administrative costs of running a business simplifying trust, transparency, and tracking for transactions. So any business which spends heavily on the 3 T’s (Trust, Transparency, Tracking) can benefit from this change.
This is not a small hunting ground, incidentally. Trust, Transparency, and Tracking is at the heart of commercial data management. There are the obvious targets, of course: registrars, escrow services, payments, data services. Everyone loves a cost savings story. Another set of opportunities emerge when you consider trust as a barrier to executing a business model or organization structure: what can we do if it gets cheaper to track or trust people?
We can also spot future losers in this process. Is the value of your business built on selling Trust, Transparency, or Tracking? This is a good time to evaluate your strategic options. Perhaps break off a small team and let them run a few skunks works projects to test alternative business models and offerings.
Remember how much it cost to get a website online in the late 1990’s? You had to buy hardware. Either write your own server or integrate some monstrous package that was morphing at break neck speed as the ecosystem evolved. Web design? Hand coded. Good luck running cross-browser. Accept credit cards? Nervous laugh. The first boom unleashed a huge wave of investment and talent development in these spaces. Scale drove cost efficiency, which was competed away, reducing costs for business users and consumers. These services are now a commodity offering.
The crypto-currency craze will do the same for block chain. Investment manias are a capitalist human wave attack on the economics of scale for a technology. The cost of talent, hardware, software packages will decline. During the sobering up period after the current crypto-currency binge, these resources will be redirected into more useful projects that will create real value. This is where the puck is going. Place your bets here.
Turn off CNN and get back to work. There’s a real business here and the cost of entry is going to start dropping.