History Doesn't Repeat Itself, But It Does Rhyme

So goes the famous Mark Twain quote.

I thought of this in reading a few blockchain sector reports this morning.

David Kelnar‘s “blockchain primer” is a very good summary of what is promising about the crypto sector and what is challenging.

In his summary at the end, he writes:

Tim Berners-Lee developed the protocol for the web in 1989. 10 year later, in 1999, its potential was glimpsed — but technological, commercial and economic challenges brought expectations back to earth with a crash. 15 years later, Tim’s vision for globalised information, e-commerce, and communication was realised. The Bitcoin white paper was published in 2008. 10 years later its potential was glimpsed — but technological, commercial and economic limitations brought expectations down to earth with a crash.


I take that as a suggestion that the crypto sector is following essentially the same timeline as the web sector. Facebook launched in Feb 2004, four years after the start of the internet crash. So using David’s timeline, the killer app for crypto might launch at the end of 2021 or early 2022.

But then there is this chart from Morgan Stanley’s recent report on BTC and Libra:

As you can see in that chart, Morgan Stanley’s timeline for Bitcoin is much faster than for the Nasdaq. It seems that their implicit argument is that the crypto sector will move much more quickly through its ups and downs than the web did back in the 90s and 00s.

I am more in David’s camp than Morgan Stanley’s camp. I think the crypto sector is progressing, but slower than I would like. I remain long term bullish but short term frustrated with the crypto sector. As I have been for quite a while now.


Comments (Archived):

  1. Tom Labus

    “In investing, what is comfortable is rarely profitable.” I try remind myself of this usually after I have despaired on an investment. Being early requires a lot of patience and sometimes a restart.

    1. sigmaalgebra

      Often and routinely the US DoD beats this like a “rented mule”:E.g., the Navy’s version of GPS was done on the back of an envelope at the JHU/APL (where later I was doing some programming and applied math and heard the stories); it was very much “being early”; but there was no doubt that it would work, and it did: There was a receiver on top of the building that routinely navigated itself within 1 foot.The Lockheed F-117 that took out Saddam’s lights and never got shot down? Saddam and his weapons suppliers didn’t dream of such a plane. It very much was “early”, but there was no doubt it would work.Same for the SR-71. Kelly Johnson showed up with his engineering drawings, said that with the P&W engine he could do it; and he did it.Same for Keyhole, a Hubble but aimed at the earth.Same for the nice pictures of Saturnhttps://d2r55xnwy6nx47.clou…and Pluto. Pictures of Pluto!!!!! WOW!!!!Same for WMAPhttps://map.gsfc.nasa.gov/m…WOW!!! Pictures of the universe just as it first became transparent after the big bang!!!For “early” work funded by the US DoD, NSF, or NIH, it’s standard to fund just off paper. But typically the paper has a lot of darned good science and applied math. E.g., the Navy’s GPS had to consider general relativity — it wasn’t all just triangulation on three doppler shifts. Their secret sauce to being early, spectacular, and low risk all at the same time is some darned good science and applied math.Of course, for the commercial world, also have to be sure the customers will like it. I believe there was no doubt in the mind of Bezos as soon as he could see the Internet having what he needed.I have to believe that there was no doubt at Microsoft or hardly anywhere in the computer industry that the world would like Windows 7.

    2. JLM

      .Except for being on the short side of a company. I am really vexed that WeWork did not get public. I was looking forward to shorting that POS.Be well, Tom.JLMwww.themusingsofthebigredca…

    3. dimitar

      this statement depends from lot of variables, such trading style, financial isntrument, timeframe….how can you state this in general?

      1. Tom Labus

        Emotions remain the same regardless of trading instrument.

  2. awaldstein

    The more the sector understands that it is about people and communities, not tech, the more I think they will build things of consequence for a broader market.Contrast the speakers and approach from events like Dreamforce or Zoomtopia to events like Consensus and I think this will be clear.Even the blockchain panels at Dreamforce had a more market first perspective.Believer, frustrated investor in the space so looking for the why of it.

    1. William Mougayar

      The issue is that the tech is not ready, and most technologists in that space have been poor marketers. You’re thinking way ahead of where things are. A lot of flushing is still required before the fog clears.

      1. awaldstein

        You may be right.Though sounds a bit contradictory as if the core platform is still so early to build on why do you need market building outside of the developer community which appears to be your public lament?In my very narrow but deep NFT segment where it intersects with conservation, philanthropy, art i don’t see this honestly and things that can touch the public are getting built.

  3. William Mougayar

    David’s essay was very good and he did a great job organizing some key blockchain themes (although I’m surprised there was no bibliography or references as there is substantial re-hashing of prior work in this field).That said, like you I am frustrated with the slow progress, and feel we are still swinging inside the 1993-1999 Internet era. Some days I feel we are in 1993, others in 1999. But we have certainly not entered the Web2 era equivalent, despite several companies and technologies proclaiming themselves as being Web3 already.

  4. Vendita Auto

    My only interest is in country centric or ultimately designated continents competing currency exchanges beit fiat and or crypto / bitcoin the public economies of scale require seamless institutional transition, your comments are from uptown offices not downtown mass voters who understand tech and guaranteed income economics …

  5. jason wright

    USV paid $10mn to join the Libra Association. You did that?

    1. fredwilson

      Not yet

  6. Girish Mehta

    Re: “10 year later, in 1999, its potential was glimpsed..”Really ? The potential of the web was glimpsed in 1999 ? Speechless.”Facebook launched in Feb 2004, four years after the start of the internet crash. So using David’s timeline, the killer app for crypto might launch at the end of 2021 or early 2022”.This is very strange logic. Why are you only counting the four years from the internet crash onward ? What about the applications and web usage that was mainstream well before the internet crash ? What crashed in 2000 were the financial markets, not the usage of the Internet applications that were already mainstream.

    1. jason wright

      Fred’s a web tech *venture capitalist* (neon). He *suffered* (more neon) in 2000. The *pain of it is etched in his psyche* (lots of neon, flashing, multiple colours). Financials are his barometer.

      1. Girish Mehta

        This day, 24 November 1859, exactly 160 years back – “On the Origin of Species” by Charles Darwin is published. First edition of 1250 copies is sold out immediately. A good day to remember ideas that stand the test of time.

        1. jason wright

          It’s not pulp fiction :-)https://en.wikipedia.org/wi…Darwin’s great enabler, and without the influence of whom the book may never have been written. How history can turn on the seemingly mundane decisions of individuals. FitzRoy chose Darwin for his Beagle expedition. If he had not…

          1. JLM

            .It is not just the random acts of individuals, it is often the collective omissions of vast quantities of persons who choose to ignore what they already know.Hitler wrote Mein Kampf in 1925, came to real power in 1933, launched the first concentration camps in the same year, and the world seemed not to discover he was a rotter until late 1939 when he invaded Poland.Meanwhile, that idiot Chamberlain went to lick his boots, kiss his ass, give him Austria, Czecko, and the Alsace-Lorraine for the price of a biscuit (sans clotted cream).Was the world unable to read his God damn book? He laid it out in infinite detail for anyone who could read. Back in 1925!Today, the Chinese are “re-educating” 3MM Uyghers in concentration camps, putting Hong Kong into the harness, getting ready to invade Taiwan, and have militarized the S China Sea while doing nothing of substance to assist us with N Korea, a vassal state of Xi, et al.Xi is the head of state, the head of the government, the President for Life, the head of the Communist Party, the Commander’in-Chief, and the potentate of every meaningful Chinese collective.Xi has more power than Mao ever had. This is not a good thing.In a few years, we will discover that the Chinese are not only our rival, but our fiercest enemy ever.It is all out there if we will only connect the dots.We Americans are unwilling to study our history or that of the world. There will be an exam and there will be a price to pay.JLMwww.themusingsofthebigredca…

          2. jason wright

            The Treaty of Westphalia. The nation state, sovereign borders, non interventionism. Not everyone plays by the rules of the game.Prussian ‘Poles’, Sudeten ‘Germans’, German speaking Austrians, German speaking Italians, et.c., et.c., ad nauseam (as i vomit from the headache it gives me), it’s not as simple as the EU (even Donald Tusk isn’t quite Polish, he’s Kashub, from Gdansk, or is that Danzig, which was Polish, or was it Prussian, or possibly even French when tucked under the wing of Napolean) and a map would have us believe. Europe is complicated.History Doesn’t Repeat Itself, But It Does Rhyme – who wrote that?

          3. Donna Brewington White

            Why do we even have history if we don’t learn from it?

          4. JLM

            .Well, some of us do.To lay the blame where it belongs — it is teachers who would rather teach contemporary wokeness than the foundation of our country, the documents that underpin our founding, the men and women who built it, our force for good in the world, and the goodness of our people.Instead, we have teachers who want to destroy our history because it does not conform to their desired views.We are doing this to ourselves.JLMwww.themusingsofthebigredca…

  7. sigmaalgebra

    The Lee HTTP and HTML were just DIRT simple. HTTP is much like just SMTP, e-mail, where a client can execute the protocol easily enough just by typing into TCP/IP Telnet. Writing code for the client side of HTTP is just an elementary exercise in TCP/IP — I’ve done it for several versions several times. Similarly for SMTP — used my code for SMTP client side Internet e-mail for years before tricky character encodings and MIME (multi-media internet mail extensions) became popular. HTML is just another text markup language, an especially simple one, nowhere NEARLY as complicated or capable as D. Knuth’s TeX with, e.g., boxes and glue, or several others. Later with extensions there got to be more to HTML. With JavaScript, MUCH more, enough for most of the JavaScript programmers just to make a MESS out of their Web pages, many of them just unusable.The Internet as run by DARPA and later by IBM from an NSF contract with HTTP and simple HTML caught on quickly. Clients had data rates of 300, 600, 14,000, … bits per second, and the backbone was connected with T-1 (1.5 mbps) or T-3 (45 Mbps) lines.Then the Internet started to go commercial. We got peering centers, MAE East at Tyson’s Corner in Virginia and MAE West in Silicon Valley. Soon each business wanted a simple Web site to serve as a brochure, a little more than a business card.But:(1) Data rates were SLOW, too slow for sending good still images and way too slow for sending audio or video.(2) The security standards needed for buying and selling on-line were not there yet; neither were the banks; neither were the certificate authorities, etc.(3) Operating systems and browser software were not ready yet for anything like the present, and security holes were outrageous.(4) IP routers had to get a LOT faster.(5) The world needed to deploy a LOT of optical fibers lit by solid state lasers.(6) We needed a network core using BGP, border gateway protocol — over the limited number of nodes in the core, MUCH faster than IP.(7) Personal computer hardware needed to get a lot faster, and with disks large enough for images and even video.(8) Connections from clients to ISPs, say, over coaxial cable first installed for TV, needed to get a lot faster.But quickly just from AOL, Yahoo, and Google discussion groups, company brochures, and news, demand was strong and the needed changes of (1) — (8) were made.My Lesson: There was no reluctance to use the potential of the Internet. The growth was slow only because (1) — (8) hadn’t been done yet. If the (1) — (8) had been done already, then the growth would have been MUCH faster. E.g., when Zuck’s work got popular, the Internet was ready and had been, and the growth was as fast as the publicity, network effects, etc. could spread in people’s minds. That’s still the case: If there’s something new, some “big new thing” application for the existing Internet capabilities, then the usage of the application is free just to explode.For crypto, the Internet and computing have been sufficient for a long time, not waiting on anything like (1) — (8). By now, lots of people have heard of crypto; if people like crypto enough for the usage to explode, then it will explode. That the usage has been growing slowly, with a lot of failing efforts, e.g., ICOs, shows that there just isn’t a lot of interest. Or the main reason is, not enough people like that flavor of soda pop, pizza, or ice cream. Or, crypto is still too much a solution looking for a problem.Some readers might like the discussion inhttps://news.ycombinator.co…

  8. LIAD

    From your vantage point. What’s the hold up? Still infrastructure, applications, regulation, UX, viable use cases?

    1. fredwilson

      I think David Kelnar’s primer does a great job of listing what is holding us back

  9. Kirsten Lambertsen

    Have y’all ready Future Today Institute’s annual report (there’s a Bitcoin section)? https://futuretodayinstitut…Amy Webb’s stuff is really interesting.

  10. JLM

    .In evaluating history as a precursor for the future, one has to ensure they are looking at the totality of history and not cherry picking.Using the example Freddie notes, the part of history that is ignored — cherry picked leave behinds — is that the Internet had enormous, practical, real use cases immediately.Does the blockchain?The Internet was a green field startup — it did not replace anything. It supplanted its prior comparisons.Does the blockchain have any of this real promise?I use as an example, the small case of wire transfers of money within the SWIFT system. After much to-ing and fro-ing, what emerged is the blockchain has done nothing of substance on the system while the system itself has become more efficient.The Swift potentates shined it up a bit, repainted it, greased the wheels, lubed the engine, and have basically rehabbed it.What has really happened is that big banks got together and formed Zelle — a low, low cost way to transfer money with virtually instantaneous timing, exquisite record keeping, and no trouble. It is not anonymous, decentralized, but it works and nobody seems to really want those core cryptocurrency features any way.In the end, the same question remains — WTF is the killer app for blockchain?I don’t think cryptocurrency is going anywhere. I predicted that Libra would never make it out of the cradle by its launch date when I read the first article on it. I then said it would not survive its gestation. Already, the life boats are rowing away from the sinking ship. Now, I predict it NEVER sees the light of day.Interesting, I think that Walmart’s cryptocurrency will not only make it out of the cradle, but it will crawl, walk, and eventually run. It will work because Walmart has its own killer app — scooping up $2B of money transfer fees.As Lincoln is reported to have said:”You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”I continue to be a critical thinking skeptic willing to perform my penance when proven wrong, but the time on the clock is starting to mount up.JLMwww.themusingsofthebigredca…

    1. fredwilson

      Never let the truth get in the way of a good story!!!

      1. Mike Cautillo

        My good friend used to say, “Don’t clog the issue with facts!”

  11. pointsnfigures

    Ahem, the SEC/FINRA certainly has put the brakes on everyone. Hello Washington….

  12. Donna Brewington White

    I can hardly bear to watch.But this crypto thing has got to work out…Doesn’t it?

    1. awaldstein

      not necessarily.

  13. kidmercury

    I think dlive may end up being the first crypto app that gets widespread consumer adoption, with a distinct and rapidly growing user base. All the kooks banned from YouTube are going to dlive, where they are getting engagement and an increasingly viable business model, and bringing their YouTube audience with them.

  14. Mike

    Innovators Dilemma. Disruptive technologies never start in mainstream markets since they initially lack the performance requirements. Commercializing a disruptive technology is more about finding the right entry market than improving the technology. Once an initial market(s) is found the technology can often be developed to the point that it is capable of meeting the needs of mainstream markets, displacing incumbents.Per the graph, the NASDAQ index peaked at ~ 5K in March of 2000. That number stuck in my head for years. The NASDAQ did not touch 5K again until 2015, 15 years later.

  15. Marcos C.

    Why is the progress disappointing? Why were there expectations that things would move faster than they are? And finally, progress can be non-linear.

  16. awaldstein

    You might check out these panels from Dreamforce:Young environmental activistsXiuhtezal Martinez (Earth Guardians) Alexandria Villaseñor (Earth Uprising International)Women athletesIbtihaj Muhammad (Olympic Medalist/Fencing)Megan Rapinoe

  17. awaldstein

    I wonder about the mass market mining.I see some new apps/services but have not tried them.Would love to see someone come out with a real service to let us buy fractional ownership cross a bunch of POS nodes and make this whole thing an accessible passive earning vehicle.