It’s The Ecosystem, Stupid

Danette
4 min readAug 26, 2020

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The slogan “It’s the economy, stupid” went viral when the Clinton Administration used it to make the point that it was obvious that the economy is the driving factor behind America’s success or failure.

Today, we seem to be dealing with the same blindness when it comes to understanding the driving factor behind crypto’s success or failure.

It’s Not Just the Market

In my previous article (“Blockchain Is More Than A Market, It’s A Movement”) I go in depth about market values not being an indication of a coin’s success.

When I wrote that article, I thought market watchers were the only ones who were single focused and missing an important aspect of the crypto phenomenon. But something happened that opened my eyes. Apparently those on the other side of the equation, the developers and the miners, can make the same mistake.

After I published my article, I received an email from a crypto miner asking if I would be willing to write an article giving my opinion on their coin. The miner offered me 50,000 coins if I would write a comparison of their coin vs NEO and EOS. I told the miner that I’m not the right person to ask because I will not adjust my opinion about a coin based on a contribution. If they want someone to do a PR piece they will need to ask someone else. The person said, “That’s exactly what I want, your honest opinion.” This intrigued me. Why did they want my honest opinion even if it wasn’t favorable? What did they think they could gain from it? So I asked. The response was that they wanted people to know how superior their technology is compared to other platforms.

It’s More Than Just The Technology

The coin that the miner was mining has decent technology, the problem is, that’s not enough. This is not a game of “If you build it (better), they will come.” As history has shown, the better technology doesn’t always win.

Professor Rahul Kapoor from Wharton speaks to the point that the technology is often not the deciding factor on whether a new technology is adopted into mainstream.

Kapoor says, “This research is really looking at a puzzle that we observed, in terms of new technologies being introduced into the market: There are significant differences in terms of how fast they are able to reach mainstream adoption and disrupt existing markets and players. For example, we observed that in the printer space, inkjet printers came about quickly, and rapidly overtook the dot matrix. Then look at HDTV: It took decades for it to achieve mainstream adoption. And then, you can look at things like the Segway, or the Palm types of technologies, which either created some value, or never really reached mainstream adoption.”

It’s The Whole Ecosystem

“So the question was really, what explains why some technologies are introduced and immediately supplant the existing technologies, whereas others take decades, or sometimes don’t reach mainstream adoption at all?”

“We found that the bigger explanation was not to be found in the new technology and the market, but within the technology ecosystem”

There are thousands of crypto coins out there in people’s wallets. Some of them have amazing technology but very few users. Some of them have crappy technology and a lot of users. There is no direct correlation between the quality of the technology behind a coin and its adoption rate. That’s because there is another angle that is more important than the market value or the technology behind a coin to consider, and that’s the ecosystem.

The adoption of new technologies has more to do with the infrastructure around the technology rather than the technology itself. As Kapoor says, “Think about the hybrid versus electric car discussion: The hybrid cars introduced were able to grow market share much faster than electric cars. And the main difference was, the hybrid cars could plug and play. There wasn’t an emergence challenge in the ecosystem. Electric cars had these emergence challenges around creating the infrastructure, because they didn’t have the charging stations in place.”

So when deciding whether a crypto is viable or not, it’s best to look into the use case, the community behind the crypto, the utility of the crypto and the overall ecosystem supporting it. That will give you a good overall view of whether that crypto will be successful moving forward or not.

Happy Hunting!

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