This article is part of the Internet vs Blockchain Revolution Series. If you are interested in reading the other articles, check out this post.
Emergent technologies enable new concepts and business models that were not possible or practical before. These new concepts and business models often take time to be validated and require new methods of valuation. As the Internet Revolution has shown us, timing is very important for these new concepts and models to succeed in emerging markets.
The Emergence of New Concepts:
New technologies have the potential to create new concepts and business models, allowing for new markets to emerge. For example, the Internet allowed for the emergence of new concepts such as “unlimited selection” (ex: a book store that sells all the books from around the world — Amazon), or the concept of “instant gratification” (ex: a movie rental store selling all the movies from around the world — Netflix). The internet made these new models possible, and the companies such as Amazon or Netflix understood that consumers’ expectations were changing and focused on shifting their model to satisfy these new demands. Some other concepts include “search engine”, “real-time information”, “instant messaging”, “social media”, “digital advertising” and “streaming”. Although we take many of them for granted nowadays, a lot of these concepts started as an idea and needed time to be tested and proven over time. For example, during the early Internet, Jeff Bezos had the idea of the “everything store” from the beginning but thought it was too grandiose at first and chose to focus on selling books as a proof of concept to validate the business model of “e-commerce”. Books were chosen because they are most similar to a commodity, in which the buyers knew what they would be receiving, and had a relatively high margin. Once Jeff Bezos had proven himself that “e-commerce” could be a viable business model with books, Amazon quickly expanded into other verticals.
In the blockchain space, a new fascinating concept that emerged towards the end of 2017 with the introduction of CryptoKitties was “digital scarcity”, which allowed you to own digital cats on the blockchain. Having complete ownership of a digital asset wasn’t a feasible idea before the existence blockchain, and was a major pain point that forced the traditional entertainment industry to shift their business model over the past 30 years. During the pre-Internet era, the entertainment industry had a business model heavily dependent on the sales of physical products such as CDs, cassettes, vinyles and DVDs. With the emergence of the Internet, new type of files such as MP3 and MP4, and the peer to peer protocol (1999), piracy started to flourish, and files became free for grabs online. The lack of digital copyright protection and file ownership vehicle forced the traditional entertainment industry to shift into an experience-oriented model that we know today, with services such as Blockbuster, Netflix, and Spotify. If blockchain technology appeared 10 years earlier, perhaps the way we consume digital media today would have been different. Some other new concepts that came with blockchain include “immutability”, “finality”, “cryptocurrency”, “utility tokens”, “Token Curated Registry (TCR)”, “Decentralized Financial System (DeFi)”, and “Decentralized Autonomous Organization (DAO)”. These concepts are currently being explored by many exciting projects in the space and time will validate their value in the world.