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How Disruptive is BitCoin To You?

Short term or long term.

"The distributed ledger will revolutionize banking" - that's one of the big disruption memes of today. I believe this disruption is going to take a very long time.

Disruptive technologies rarely work out as planned or predicted, and they take a decade of experimentation before they appear in a form that scales sustainably. Digital cameras? 1973 to 2007 (and the iPhone, Facebook, Instagram etc); 3D printing?  Late 1970s and still looking for scale. Social Networking? There were already 60,000 Bulletin Boards in 1994. Second Life - maybe now.

Remember the hoopla around Second Life in the mid 2000s?

Second Life was the 3D virtual world where we (enthusiasts) appeared as avatars and tried to make and transfer digital money. My avatar was Traveler Auer, a bald guy who walked around Zenlike in barefeet. Many large organizations and VCs bought into Second Life, as Second Life millionaires hit the cover of Businessweek.This was the new Internet.

Here is the CEO of IBM at the time, Sam Palmisano, telling Furtune about it. 

The 3-D Internet may at first appear to be eye candy but don't get hung up on how frivolous some of its initial uses may seem." He calls 3-D realms such as Second Life the "next phase of the Internet's evolution" and says they may have "the same level of impact" as the first Web explosion.

You've heard the same about the blockchain - it is the new Internet. Some heavyweight web minds have said so. But Second Life was also backed by many Internet pioneers - eBay's Pierre Omidyar, Benchmark Capital, Jeff Bezos, Ray Ozzie. And plenty of global companies were in there - CISCO of course, and most major consumer brands. By the way one of IBM's big ideas during an inaugural Second Life CEO Town Hall meeting was branchless banking.

If my tone seems slightly mocking then I apologise. IBM had missed out on the PC and feared missing out on virtual worlds. They dived in and made many pronouncements about the future, and exposed their desparation not to miss out on a defining trend. All these people in fact needed to take the bets they did. And it is right we should publicly test out whether the blockchain is a better way of doing databases - isn't that what we're left with if we take out the currency?

But you can't help sensing the parallels with 2005 and the Second Life swarm. Now it just so happens that Second Life is poised for a comeback, probably around immersive technologies like Occulus Rift. In this second coming it will nest into a much richer ecosystem with wider applications and a different set of business models.

We believe the distributed ledger will not provide solutions  in the timescale needed to solve banks' immediate digitization challenges. Banks need solutions like, yesterday. The ledger is a solution for 2020 and after, which doesn't mean don't work on it. It also takes years to gain experience and to grow a more open culture. But banks' digital problems are for now.

The lesson of Second Life was this - it promised a different way of life and a new form of business but it solved few problems, though it hinted that it might be an answer to the problem of expensive travel and overloaded time budgets. We found we could live with those problems by introducing tighter cost controls. Cheaper, effective, culturally more easy to assimilate, it didn't take 2005's version of the ledger. But roll on 2020. Today is DLTs era of experimentation, 2020 will see scalable use cases emerge, once we agree on the problem

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