What is the actual pace of technological adoption?
Futurist Roy Amara’s famous law tells us that we tend to overestimate the effect of a new technology in the short run while underestimating it in the long run. I was reminded of this phenomenon not that long ago, when I was informed by the receptionist at my doctor’s office that they can only accept documents sent via fax, as opposed to email.
And so, almost half a century after a better technology was invented, the halls of one of America’s biggest hospitals still echo with the sound of fax machines receiving documents one excruciatingly slow page at a time (unless there was a busy signal.) A bit of googling reveals that faxing is more popular than one would think, despite the ubiquitous availability of a better, faster and cheaper alternative.
There is an important lesson here for those of us getting swept up in the blockchain revolution.
If you understand the true potential of decentralized and distributed ledgers ruled by consensus, then it’s not hard for you to imagine a world where banks have been usurped by cryptocoins, Uber has been replaced by a dapp on Ethereum and Facebook is losing users to a social media site structured as a DAO. Your imagination is probably right.
But it’s also early. Making a compelling argument as to why people should switch to a new way of doing things takes knowledge. Creating a viable product that utilizes that technology takes hard work. Getting users to actually switch to that technology takes time. Lots of it.
The main reason businesses that still use fax give for not switching to email is security, because a fax machine can’t get hacked the way email can. That’s a valid concern, but it’s not a legitimate reason not to switch. It’s just a reason to have strong security once you do.
The real reason I suspect more companies don’t abandon faxing is because doing so represents a major change to their operation, and changing whatever it is that has been working for you is scary, regardless of the benefits.
Blockchain technology, on account of its ability to build trust where it wouldn’t otherwise exist, has the potential to be one of the most disruptive phenomenon in history. But that means it hits at the core of so many of the processes that are fundamental to our lives today, like entrusting large financial institutions to handle our money or using a “wet” legal system to settle contracts
The more fundamental the change you hope to bring about, the more social inertia you are bound to encounter.
Most entrepreneurs live by the old saying that if you build a better mousetrap, the world will beat a path to your door. But history is full of examples where the opposite was true, and it was the entrepreneurs who had to beat the path to the people, by making compromises. Our smartphones, after all, still dedicate significant resources to making old fashioned analog phone calls, despite the availability of countless digital alternatives.
One of the more counterproductive habits among the crypto faithful is a tendency towards absolutism. Projects that promise to radically change the world are celebrated, while those that want to incrementally improve it are dismissed.
In the grand scheme of things, faxing itself is not that old of a technology. The fact that it has yet to be disrupted away should serve as a warning to anyone who thinks fiat money, a technology that’s been around for a thousand years, is about to go away thanks to the superior features of Bitcoin.
The solution is to embrace all the little bridge technologies in between. A project like Ripple might have its flaws, but we shouldn’t automatically dismiss using a blockchain to improve the existing banking system. It will take such an intermediate step to convince many of the viability of the technology, in the same way that DVRing cable TV was a good stepping stone toward cutting the cord and subscribing to Netflix.
And even when financial blockchains are accepted as viable, there is no guarantee that cryptocurrencies will become the standard medium of exchange. Most of the benefits of such coins, like fast and cheap transactions, can also be offered by tokenized fiat money riding on government-sanctioned blockchains. To most of the millions of people who use PayPal, a tokenized Dollar riding the official Blockchain of the Federal Reserve would be a sufficient upgrade.
Money is controlled by governments, and governments are always late adopters (a perfect example of which is their continued reliance on faxing.) If they are that slow at embracing digital communication, imagine how slow they will be to embrace digital money.
Perfect, as the old saying goes, is the enemy of the good. In that same spirit, the desire for total change is the enemy of actual progress. That’s not a reason not to try, but a motivation to grab the low-hanging fruit. An idealist will just sit around and wait for the day when cryptocoins replace our existing banking system. But the successful entrepreneur will call up those in charge of that system today and offer them a product that will incrementally improve their service.
That was probably the thinking of the people who founded eFax, an internet faxing service that was founded less than 20 years ago, at a time when the impending death of the fax machine was already a hot topic. Instead of waiting for email to take over, eFax made it a core part of their offering. Today they boast over 10 million subscribers, and given their monthly subscription fee, are probably more profitable than many email startups that have come and gone ever were.
My beginner’s guide to blockchain technology will be published this month. Sign up for my newsletter to get an alert when it’s available for purchase on Amazon.