– November 5, 2019
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What do vaccines, pasteurization, and credit cards have in common? Each of these inventions and new technologies had to overcome substantial pushback, regulatory scrutiny, and consumer skepticism to obtain broad-based adoption. 

If those trends and feelings sound like they are familiar, that is because those are the exact same trends that continue to make headlines in the blockchain and cryptoasset space.

Even as institutional interest and investment continue to move forward to the tune of billions of dollars and thousands of people-hours, the levels of regulatory and consumer scrutiny continue to increase. In addition to a lack of understanding and education that still exists in the marketplace, this also illustrates the reality that current efforts to address these doubts have proven less than effective. 

So how can inventions from the past, none of which involve decentralized databases or cryptocurrencies, assist the blockchain community going forward? They can because no matter what specific technical differences exist, the debates around adoption, modification, and eventual acceptance of new tools or technologies tend to be pushed forward by a few common factors. 

Lessons From the Past 

The first medical procedure that would eventually develop into the vaccine industry hit the market in 1796, but several additional developments were necessary for vaccines to become mainstream. In addition to the science, specifically germ theory, becoming more generally accepted, the scientific community at large needed a large enough set of results and information to confirm the validity of the vaccine model. On top of the scientific advances, the vaccine industry was also in need of a breakthrough product — an iPhone moment if you will; the polio vaccine, approved in 1955, provided the spark that accelerated global vaccine awareness and acceptance because it directly addressed and solved a critical market need.

Pasteurization might be most commonly associated with cheese and other dairy products and has without a doubt made many food items have longer shelf lives and be safer to eat. That, however widely beneficial as it is, was not the original goal of the pasteurization process. Originally the process was developed to improve the shelf life and maintain the quality of wine, which was certainly a positive development, but not what might first come to mind. In other words, the directions that the new technology developed in were related to, but not the same as, what was originally intended. 

Credit cards might bring to mind mobile payment options such as Zelle, Apple Pay, or any of the other payment tools inextricably linked to mobile devices, but that overlooks why the idea of credit was invented in the first place. In whatever form the credit took — bronze, precious gems, or financial assets — it was developed to allow consumers and merchants to exchange value even if one or both parties were short on funds at that specific moment. 

Credit expansion is by no means a perfect scenario and can lead to asset bubbles and overheated markets, and the bursting of said bubbles can leave economic wreckage strewn about. The appeal of credit, at the core of the idea, is that it fills a need in the marketplace and does so in a way that is simple to use and convey to potential customers. 

The Blockchain Connection 

Taking a step back and observing the bigger-picture trends that these prior examples demonstrate, the connection to the blockchain and cryptoasset conversation is clear. Vaccines needed a breakthrough product with mass market implications to succeed, pasteurization is an example of how initial applications can lead to new and creative outcomes, and credit in general has been such a success for so long because it addresses a need in the consumer marketplace.

Blockchain and cryptoassets, in order to succeed and achieve mass market adoption, should look back and learn from examples of other innovative ideas that required a little time to catch on. The original value proposition of the bitcoin blockchain has, to a large extent, been copied and replicated by established incumbent players, but that does not mean blockchain technology has no value to deliver. To the contrary, the continued investment in the technology demonstrates the opposite of that; highlighting these new and expanded capabilities will play a large role in the adoption of blockchain for commercial and consumer purposes. 

Developing that breakthrough product, like the polio vaccine, is not something that can be mandated, centrally planned, or micromanaged. While it is unclear just what exactly that breakthrough product or development will be, it will need to be something that has appeal to consumer and business markets. The continued pressure and scrutiny the Libra project has faced illustrates just how difficult developing this breakthrough product is, but that spark to spur greater adoption is certainly something blockchain applications have lacked to date. 

Finally, just as the idea of credit in its various forms has been successful at least partially due to the ease with which it is understood, blockchain proponents will need to develop a simpler and easier-to-understand message. Simply based on the questions asked by Congress and other regulators, the message about the proposed benefits of various blockchain projects continues to be muddled at best. A clear, concise, and understandable message would undoubtedly facilitate more productive conversations.

The Takeaway

Blockchain is a fast-moving and multifaceted technology tool, but just because it is different from the other products and ideas that have come before does not mean this tool has nothing to offer. Making an effective business case, building products that consumers understand and want to use, and communicating the value of those products are solid strategies no matter what the time period being analyzed.

Sometimes it pays to learn from the past to help navigate the path forward. 

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Sean Stein Smith

Sean Stein Smith is a Visiting Research Fellow at the American Institute for Economic Research, focusing on blockchain, cryptoassets, and the economic impact of these technologies. He is an Assistant Professor at the City University of New York (Lehman College), serves on the Advisory Board of Wall Street Blockchain Alliance, where he also chairs the Accounting Working Group, and chairs the Emerging Technology Interest Group of the New Jersey Society of CPAs.  His research has been quoted in dozens of scholarly and practitioner publications, and he is a regular speaker at accounting and technology conferences. Follow him on Twitter.

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