The 8000X DynaTAC of our time

Not too long ago, I read a wonderful article on the nature of the gimmick. When we think of gimmicks, we typically think of novelty items like the soup ladle I bought some time ago that stands on its own and looks like the Lock Ness monster when submerged in a soup pot. More generally, one can describe a gimmick as a solution to a problem nobody has.

In the tech space, unlike with household items, however, these gimmicks can literally change the world. The mobile phone was a solution to a problem nobody had since we all got along quite well using our fixed-line phones. Yet, within a few years during the 1990s, mobile phones revolutionised the way we call each other and made fixed-line telephones virtually obsolete. About a decade later, another gimmick made the mobile phone virtually obsolete: the smart phone. If we are honest, we didn’t need a phone that allows us to send and receive emails and surf the internet, but once we had one, we didn’t want to go back. 

Our employers were particularly happy about these gimmicks since they allowed us to work always and from everywhere. I distinctly remember the day when I realised I had lost control over my personal life. I was queuing at Heathrow Terminal sending work emails from my Blackberry. I looked up and there was an ad for a phone company with the slogan: “Leave the office but not your work.” Touché.

Yet, the specific nature of tech gimmicks is that they are both ahead of their time and already obsolete. In the 1987 movie Wall Street, Michael Douglas uses a mobile phone, the Motorola 8000X DynaTAC. It was ahead of its time, but only a couple of years later, you would not have been seen dead with it because it would look ridiculous.

The 8000X DynaTAC in Wall Street

Source: 20th Century Fox

Which brings me to one of the questions I get asked again and again: What do you think of cryptocurrencies?

I think blockchain as a technology will be a major step forward in security technology for contracts and other data that needs privacy and protection from theft. Cryptocurrencies are, on the other hand, a gimmick. We already have real currency as well as alternative currencies for those who are afraid of the ability of governments to print money indefinitely (it’s called gold). If you want to make electronic payments, we have plenty of secure, low-cost ways to do that. In fact, today’s most prominent cryptocurrencies like Bitcoin aren’t even remotely able to replace electronic payment systems because the number of transactions that can be performed per minute is way too small. Visa performs about 24,000 transactions per second at the moment, while the maximum number of transactions per second that can be made with Bitcoin is seven and falling. The problem with most cryptocurrencies is that they are so computationally intensive (and thus so damaging to the planet due to their CO2 emissions, if I may add) that they can never replace our most popular electronic payment systems.

In that sense, Bitcoin is the 8000X DynaTAC of today. It is clumsy, heavy and pretty much useless. But does that mean that cryptocurrencies aren’t going to take over the world? Think of mobile phones and smartphones. The technology is getting better and better and with it, we will develop new forms of cryptocurrencies that are better suited to everyday problems. Central banks around the world are experimenting with digital currencies and I would put my money on these central bank-issued digital currencies to be the ones that will change our world. Bitcoin, not so much. Whatever the Fed or the ECB or the Bank of England will issue, however, is a very different ballgame. Those cryptocurrencies are likely going to be the iPhone of the crypto world, in my view.