Sources of innovation ideas that played key role in crypto currencies – it can be said that it is a combination of Knowledge Push, Demand Pull, Design led and User-led as a result of which it is seeing as having the potential to disrupt several industries being a Paradigm innovation at its core.
The innovation in crypto currencies can be divided into two related innovations that made it possible.
One is the innovation in the financial space regarding how the whole industry could be disrupted by the use of crypto currencies and how the role of banks and intermediaries in the creation, storage and movement of fiat currency will change or be of less importance. The invention of peer-to-peer money transaction and taking the control of economy out of the hands of the banks and the financial industry and giving it in the hands of people is significant to understand the evolution of this concept. In 2008, financial crisis where people lost millions of money due to several factors and as a result, lost jobs, lost houses and other ripple effects on the economy – is said to be one of the main reasons for releasing of the Bitcoin white paper and coming of the concept of crypto currencies. This alone can be a Demand Pull innovation. It can be said that there was a demand for such a financial concept.
Now, this financial concept of peer-to-peer crypto money as I said above was due to Demand Pull innovation, could not have been possible if there was not a Knowledge Push. The fact that Bitcoin itself is a new term, the elements and concepts that made Bitcoin existed for more than a decade or two. Knowledge areas like cryptography, Adam Bach’s Hash Cash concept about Proof of Work and Byzantine Fault Tolerance etc existed in the nineties. So, Knowledge Push, in terms of how these concepts and technologies could be used together in the financial industry with the application called as Bitcoin was an innovation. It can be said that it was comparatively easier since all the components that make Bitcoin a P2P crypto currencies was available and researched over last twenty years before 2008 so a knowledge base existed.
The second category of innovation is the technological innovation that enables this concept. It is no denying that this is completely a technological innovation that involves Cryptography at its core and other technical concepts such as proof of work or solving the problem of double spending. This to me is Design-led innovation. Majorly, the concept of distributed ledger alone and that going away from a centralized process to a decentralized way of doing ‘anything’. It’s a totally mind boggling concept and the very fact that this design is disrupting many other industries like the Identity Management, Land Registries, Document Verification, Energy Sector, Supply Chain , Music industry and many more simply proves how this design can be used to innovate and change the way we do things currently. This design will change the technical solutions but more importantly it will enable and disrupt our way of life. A simple example in the Energy sector, where users will not just be consumer, they will become ‘prosumers’. Sharing energy by using smart meters and recording transactions into block chain is enabling how we perceive being energy users. So, as more areas are included and more industry are disrupted after 2008, it is definitely becoming a Design-led source of innovation.
Now, looking at the areas where the concept of Bitcoin and Block chain are extended, in early years after 2008, mainly with Bitcoin it was more sort of proving the ideas and expanding on the understanding on how Bitcoin could be used as money and its implementation in terms valuation and usage was done. Some years after, the bitcoin and block chain developers started seeing the potential in different industries and started to move quickly to build other solution and doing POC’s/POV’s. This led to innovation in other industries and can be attributed as the source of innovation to be User-led innovation. In 2016, came Ethereum and ICO’s. This platform uses cryptocurrency known as Ether to facilitate block chain-based smart contracts and apps. Ethereum’s arrival was marked by the emergence of Initial Coin Offerings (ICOs). ICO’s could be said as another innovation in the crowd funding space. So it can be said that ‘user-led’ and ‘design-led’ are major sources of innovation in the later period like 2016 until now.
Conclusion:
As I have mentioned above with different examples, I think, all sources of innovation have contributed to the innovation happening in Crypto Currencies since 2008 until now and will continue to disrupt more industries. This is a paradigm innovation that is going to change everything that we do today.
[Saif Akhtar is a technologist in love with Blockchain innovation & disruption ]