What Happened In 2018
Continuing the year end theme, it is time for my annual recap of what happened this year, to be followed by a look forward tomorrow on the first day of the new year.
Last year I was not particularly confident in my look forward. I thought Trump would be President at the end of 2018, I thought the Republicans would lose control of the House, I thought the “techlash” would escalate, and I was worried about crypto. Those all turned out to be correct. But I had less clarity about the direction of the economy and the tech sector.
What actually happened was that 2018 was a year that we lost trust in tech, government, and a lot more.
Let’s start with tech. This chart I saw in Recode’s year end wrap-up says it well:
While much of the distrust is currently aimed at Facebook, the “I don’t trust you” numbers are growing for many other big tech companies.
I have always felt that search traffic on our portfolio company’s DuckDuckGo’s search engine is a great proxy for distrust of Google and that curve looks like it is going parabolic:
2018 also brought us GDPR, the first of what I expect will be multiple regulatory efforts to control the large tech companies’ use of our personal information for their gain and our loss.
But more important are our personal decisions about the technology we use and what we use less or stop using altogether.
In 2018, we saw social media usage in the US flatten out and possibly even start to decline a bit. Here is another chart from that Recode year-end wrap-up:
And the usage of screen time management apps, like Screentime on iOS, is surging. We know we are addicted to tech, we don’t want to be, and we are working on getting sober.
All of this lost trust is challenging for big tech, and the tech sector in general, but is also a huge opportunity for new companies and new technologies that can offer different products and business models that we can trust more, or don’t need to trust.
This loss of trust in 2018 was not limited to the tech sector. In the US, and also in many places around the world, we are losing trust in our institutions and our elected officials.
In the midst of the most charged political moment of 2018, the Kavanaugh hearings, I was talking to my mom who is 88 years old and has seen a lot and she said to me “I don’t know who to trust.” Neither do I. And I suspect most of us don’t either.
In the US, we have a President who is not trustworthy and may well be a criminal. We will get to that tomorrow when we look forward. And we have a Congress that no more than 20% of us trust and haven’t for over a decade.
We also see the decline of democracy and the rise of autocracy around the world.
These are worrisome trends. But I am an optimist. See a problem, find a solution.
Which takes me to crypto, naturally.
On the surface, one would say that 2018 was a horrible year for crypto. This is the Bitcoin price chart from our portfolio company Coinbase:
Native (token sale) fundraising for crypto is also way down:
But the truth is that 2018 was a year that the crypto market continued to prove its resiliency. Trading volumes declined massively but the underlying blockchains did not collapse.
This is a chart from Coinmetrics.io which shows the transaction volume of the top ten crypto-tokens by market cap over the years:
What this very busy chart tells me is that there are now many public blockchains that are supporting daily transaction volumes in the ten of thousands to hundreds of thousands.
I think this chart of Bitcoin transaction volume from Blockchain.com tells the story of 2018 well:
Crypto took a big hit in the first half of 2018 with the collapse of trading volumes. But the underlying strength of native blockchain transactions picked up the slack and it won’t be long until transaction volumes make new all time highs. Token Prices? Well that is another story, and more appropriate for the look forward tomorrow.
In summary, 2018 was a tough year for our institutions, including the big tech companies that are our new institutions. We are losing trust in them. And looking for new things to trust. Which also creates an opportunity for a post trust society. More on that tomorrow.
Happy New Year everyone.