Amara's law is the idea that we overestimate technology in the short run and underestimate it in the long run. You probably already knew this intuitively, but now you get to appear more credible or well-read or whatever when you discuss it over cocktails because you can identify it in the form of a law.
As others have pointed out before, Amara's law is one of the reasons bubbles happen. We overestimate the new new thing, believe it'll be up and running and fully adopted by tomorrow and get disappointed when it isn't. And when we find out we're right, it's usually decades down the line.
I'm bringing up Amara's law not to make you a more entertaining party guest exactly but because that's precisely what came to mind when I read Taylor Pearson's piece Markets Are Eating the World. In it, he describes how blockchain will affect the concept of the firm and really walks through why DAOs will be transformative in the new, remote work-oriented economy.
The idea that investment companies need data to have a competitive edge in the current information age is not new.
What is new is that in the blockchain world, almost all the data is public. Every transaction that happens on a network is recorded forever in a public blockchain including the amount transacted and the addresses involved. Yet, the data is still hidden in a sense. The data stored in blockchains is hard to deal with to extract useful insights.
As TD research partner and lead dev of Ethereum 2.0 Prysm client Raul Jordan has stated, database model used for Bitcoin and Ethereum and many other blockchains (LevelDB) is optimized for transactional integrity in consensus, not for relational storage or retrieval. LevelDB does not have relational models and does not support SQL queries.
This makes it a daunting task to extract any insights from this data format.
When people think about blockchain analytics opportunities they generally think about things like block explorers. In the case of a block explorer, though, the total cost to the user is zero and funded by ads. This is not the case for meaningful data query requests.
Investors, funds and even crypto companies need to perform far more sophisticated data collection and analysis for various reasons. For example, crypto exchanges, especially in the US and Europe, need to perform intensive blockchain data analysis to comply with AML regulations and to ensure that their users don’t use the exchange for illegal activities such as liquidating stolen cryptocurrency or ransomware payments.
These companies are also obligated to ensure that their users are not transferring cryptocurrencies to sanctioned entities or funding illegal operations. Multiple companies, Chainalysis, Elliptic, etc, provide blockchain analytics tools that are being used by governments and exchanges to combat illicit uses of cryptocurrencies.
Read the full report on the next wave of crypto unicorns over here.
QUESTION OF THE DAY
We are having a debate. If I say "low time preference" does that mean I want the thing to occur on a long time horizon or that I don't care? - Jill Carlson.