The Truth about Bitcoins and the Blockchain — Part 2

Reality vs Hype in Two Foundational New Technologies

Part 1 — Bitcoins, A Real Future
Part 2 — Blockchain Hype, Mania and Scams (this page)
Part 3 — Regulatory Needs, and Promising Startups

[Note: A earlier version of this part was first published July 20]

tl;dr

• The blockchain (distributed ledgers, tamper-resistant transparent transaction databases) will certainly see piecemeal new uses in the next decade. This technology started with bitcoins, and is being being experimented with by banks and other industries today.
• These groups are trying out their own private versions, to enable useful new functions like consensus modification of the ledger. They are seeking small, incremental benefits from those applications.
• Unlike bitcoins themselves, these applications aren’t the crowd-driven, platform-level, “revolutionary” uses of blockchain tech being proposed by so many blockchain evangelists and opportunistic startups today.
• We won’t be replacing banks or financial systems, rather, those and other users will adopt the best uses of blockchain tech and ignore the hype. You should too.

Fear and Greed, Panics and Manias, and the Scams they Breed

We humans are still far too susceptible to fear and greed, to negative and positive hype, to the panics and manias those induce, and to the scams and waste that each breeds in society. Our digital world, now the fastest-changing system on Earth, is particularly susceptible to both extremes.

Y2K Horseshit (Hyatt, 1998)

Let’s talk about fear first. Remember Y2K Bug? The approach of the last millennium bred herd-like, fear-driven behavior around the world. In the US alone, $100 billion was spent upgrading our IT systems, $9B by the Federal Government. A lot of it was waste, especially in the last few years before 2000, as people rushed to fix things that weren’t broken, paying top dollar to consultants and security firms. Canadian computer expert Peter de Jager started the fear with a breathless Computerworld article, Doomsday 2000 in 1993. He did his best to keep stoking that fear almost all the way up to the big…