Paul Brody: Time Is Running Out to Win the Blockchain Race

History is full of companies that missed out on big technological changes. Many of them thought they were carefully timing their participation in the market, but I believe they may have been looking at the wrong measures of adoption and consequently made the wrong decisions. That pattern is about to repeat itself with blockchain. The issue here is that when it comes to technology, the battle over standards and market leadership is usually decided before mass adoption.

The result is that by the time most companies notice that the market is entering a mass-adoption phase, it’s too late to change the course of the market. The market for personal computers arguably started in 1977. A decade later, in 1987, less than 15% of all American households had a personal computer, but by then, Microsoft Windows was the market leader with more than half the market. (Great perspective from here and here and here.)

Paul Brody is EY’s Global Blockchain leader.

The pattern repeated itself in the smartphone category. Nokia can be said to have kicked off the market with the Symbian ecosystem in 2000. Email-focused smartphones followed in 2003 and then touch-based smartphones in 2007. By 2011, even though adoption was still less than about 20% of the market, we already had the same two market leaders we know today.  

The pattern appears to have largely repeated itself in the world of cloud computing and networking systems. Even though both markets are largely based on open-source technologies and well-understood published standards, they remain dominated by the original leaders, even after decades of determined and big spending competition. The market leader in networks has a 50% share, and the market leader in cloud has a 32% share.

And so there is a lesson here for the world of blockchain: Time is running out. That’s true for alternative blockchains, for legacy players, for everyone who isn’t already knee-deep in this business to become a serious player.  Depending on the starting point you select (Bitcoin in 2009 or Ethereum in 2015), we are seven to 12 years into this market development. Estimates vary, but the more reliable ones point to between 8% and 10% of all Americans already own some cryptocurrency. The window to create a leadership position seems to close around 10-12 years after a market is created, and so that time is near, if it hasn’t already arrived. 

The most astonishing aspect about market leadership in technology is how little it depends on the technology itself.