This post is part of CoinDesk’s 2019 Year in Review, a collection of 100 op-eds, interviews and takes on the state of blockchain and the world. Jeffrey Amico is an attorney at Fluidity, creators of the ethereum-based peer-to-peer trading network AirSwap.
In his seminal book The Innovator’s Dilemma, Clay Christensen explains how “disruptive” innovation occurs. Whereas incumbents are constrained by the needs and desires of their existing customers, new entrants can instead experiment with new technologies and target under-served or “fringe” customers. In the eyes of mainstream users, these new innovations initially look and perform worse than existing offerings. Often times, they start out looking like a toy.
Critically, however, they offer certain distinct attributes or features that are highly valued by the under-served customer segment. Over time, if the product is truly disruptive, the mainstream users will realize that they too want the new features, and will come to demand them as well. Through this progression, disruptive innovations move from the fringe to the mainstream, until they eventually overtake the incumbent’s offerings. Crypto entrepreneurs can follow this same roadmap to achieve mainstream adoption.
At their core, blockchains are shared computing systems that users can trust to record data and execute code as instructed. Because they sit outside the control of any particular entity or government, blockchains enable things like privacy, transparency and trust-minimization. While it is easy – and perhaps characteristic – for crypto entrepreneurs to assume instant universal demand for a financial system built around these features, there remain significant roadblocks to mainstream adoption. The most notable is that – at least in most developed economies – existing financial markets and products tend to work quite well for most users. It makes little sense for these types of users to switch over to a nascent technology that offers worse…