Talking about the development cycle of the Bitcoin industry - the Bitcoin industry seems to be introducing government factors

Chapter 0 Introduction

Recently, the attention of the Bitcoin community has been attracted by the fact that the Chinese government has set up an inspection team on the exchanges. The exchanges have also cooperated and taken substantive actions to close the financing and currency lending projects.

These events reminded me of a book called “A Brief History of Technology: From Corsairs to Black Helicopters”, which counts the development history of the most important technologies that have changed humanity, and then summarizes a set of development life cycles that all technology industries conform to.

Chapter 1 The Life Cycle of Technology Industry Development

The development life cycle of the technology industry from "A Brief History of Technology" is as follows:

The first stage is innovation. There is not much commercial activity in this stage, only a few enthusiasts try out various possibilities of technology.

The second stage is commercialization. Based on the first stage, the commercial benefits of inventions become clear. Business-minded people from all walks of life begin to figure out how to use them to make money. There are good people and bad people among them, and the entire business development is in a chaotic period.

The third stage is creative chaos. Based on the second stage, as entrepreneurs seek long-term development, the technology industry will develop from no rules to rules, and from disorder to order. Entrepreneurs begin to establish technical barriers and regulatory barriers, especially the property rights system.

The fourth stage is to formulate industry rules. In order to protect their interests and long-term development, entrepreneurs will introduce government power to formulate laws and regulations for the industry. From then on, the industry will enter a period of sustained commercial development, and bad people will be punished by law and eliminated from competition.

The development life cycle of this set of technology industries highly overlaps with technologies that have changed the form of human society, including navigation technology during the Age of Exploration, telegraph and telephone technology, and the current development of the Internet.

Chapter 2 Bitcoin also fits the technology industry life cycle

After reading this book, I feel that Bitcoin, an invention that will inevitably change the form of human society, is also in line with the life cycle of the technology industry.

In the first stage, Satoshi Nakamoto invented Bitcoin, and the entire Bitcoin community was deserted. Satoshi Nakamoto created the Bitcointalk forum, which was really geeky. Apart from text and extremely simple emoticons, it was difficult to post a picture. If you flip to the posts in 2010 and 2011 on this forum, you can see the performance of the enthusiastic technology enthusiasts at that time. They contributed very remarkable ideas, and these ideas created the revolutionary technology of Bitcoin. But these people did not register patents for these ideas or start companies. There was almost no commercial activity.

In the second phase, starting from 2011, a large number of simple entrepreneurs began to pay attention to Bitcoin, especially the mining industry and exchanges. A large number of smart businesses began to use Bitcoin as an infrastructure to build their own business buildings. There were also many controversial patent applications. Business propaganda and wars also overshadowed the technical discussions in the first phase. Looking back a few years ago, a famous word "tearing" appeared in China, and companies had a large number of conflicting quarrels. The entire business was still in a period of chaos. In this process, some great companies were created and are still doing well today, but there were also a large number of failed companies, and even the bosses ran away, cheating a lot of people's money.

In the third stage, it feels like the past two years. As the cost of entering the industry gradually becomes higher, the first-mover advantage of old companies begins to play a role, forming a sphere of influence barrier. These entrepreneurs begin to seek long-term development, start to establish rules, apply for patents, and introduce government regulation. In addition, entrepreneurs begin to influence Bitcoin development, including influencing developers through hiring and donations. In the past two years, old entrepreneurs in the Bitcoin industry have stopped "fighting" with each other, but have begun to go out, give speeches in various parts of society, and participate in various academic discussions and industry forums. Photos of government officials have also begun to appear on the homepages of various companies.

As American entrepreneurs continue to lobby the U.S. Congress, especially with the New York Bitcoin license and the application for the establishment of an ETF fund, a small part of the Bitcoin industry, mainly financial-related exchanges, seems to have begun to seek the fourth stage. This year, China's exchanges and the government have had high-level contacts. The government directly sent "special envoys" to the exchanges to conduct investigations that lasted for several days. The exchanges also cooperated very well, especially in public opinion. The three major exchanges took the initiative to welcome the government's investigation at the public relations level. Today, they collectively closed the financing and currency projects to show goodwill to the government.

Of course, apart from the exchanges that are most closely connected to finance, other industries of Bitcoin are still clearly in the third stage, or even the second stage. For example, the mining industry is still in a commercial melee, and everyone is very conscious of introducing government regulation. Even if it cooperates with semi-official industrial parks, it is carried out under the slogan of cloud computing. In the Bitcoin media industry, it is even more in the second stage, and everyone is still happily arguing with each other. As for Bitcoin development, it seems even less standardized. The main developers of the Core development team are from Blocktream, the Classic and Unlimited development teams seem to be mainly freelance workers who receive donations, and the XT development team is even more mysterious and rarely communicates with the outside world.

Chapter 3 Will the establishment of industry norms and barriers in the Bitcoin industry harm decentralization?

Is this a question worth pondering? I don’t think so, at least there is no sign of this happening yet.

The main manifestations of decentralization are decentralization of computing power, decentralization of complete nodes, and decentralization of development.

What the government really cares about is how to collect taxes, how to avoid mass incidents, etc. At most, it uses antitrust laws and the like to pretend to maintain fairness.

I can’t imagine that entrepreneurs and governments working together to establish industry norms will undermine decentralization. Of course, this issue still needs to be further observed and thought about in the industry.

Chapter 4 I hope the government will be more gentle in its regulation

In general, I am a free marketeer, and I hope that the Bitcoin industry will develop more in accordance with free competition. Although I know that entrepreneurs will inevitably introduce government regulation, after all, this is one of the best ways to establish industry barriers. But I think the government is too heavy-handed and often controls the industry to death.

I hope that the game between enterprises and governments, and between enterprises, can provide Bitcoin with a more relaxed development environment.

But I can't really explain this. I can only express a little wish.

Chapter 5 Conclusion

The emergence of any new technology is driven by geeks who are obsessed with technology itself and strive to expand the scope of human knowledge. Everyone wants to escape the control of the government, and individualism prevails. Then there are good and bad people. Then entrepreneurs come on the scene, leading the technology to become an industry, and introduce government factors, establish property rights and regulations, and finally form an orderly industry.

The introduction of government factors into the Bitcoin industry appears to be underway, and it is unknown how far and how deep it will be involved.