Emerging technologies can be a tough subject for discussion. Experts, practitioners and just about anyone in the IT field can be very opinionated and passionate when it comes to a particular technology, especially if they are currently working on an implementation or have some financial stake in the technology’s success. The first Bleeding Edge column, “Blockchain: Love It or Hate It, It’s Here,”1 was an attempt to not only educate ISACA® Journal readers on how blockchain functions, but also point out the dangers of ignoring or dismissing a technology based on hearsay or disbelief in its value. But what if the implementation of the technology success is solely based on public belief? What if the only value given to a technological implementation of blockchain is what people are willing to pay for it? Enter cryptocurrency—an ongoing case study in volatility and emotion pertaining to emerging technology.
When it comes to the true technology driving cryptocurrency, blockchain, enterprises are adopting it on an impressive scale2 and the rate of adoption is accelerating. Cryptocurrency is a different implementation of blockchain technology than most of these companies are utilizing and can almost be completely separated on its own, as it attempts to create a truly decentralized financial system—a seemingly impossible task.
The “Great Crypto Rush” of early 2021 is hard to ignore, simply because of the vastness of its impact on financial markets. Bitcoin’s market cap hit US$900 billion. Dogecoin (an altcoin originally created as a joke) made 1000 percent gains in a few months. By no means is this column intended to encourage an individual or company to invest in crypto but simply to inform, as there are lessons to be learned from the crypto craze phenomena and its contrasts to other emerging technologies. One observation where impact can be gleaned is by analyzing the different reactions of current institutions to this seemingly autarchic and thriving system.
US Secretary of the Treasury Janet Yellen made the case earlier this year that the main function of cryptocurrency is for nefarious purposes contributing to terrorism, the drug trade and other illicit activities.3 In contrast, China is creating its own cryptocurrency in an attempt to rival Bitcoin, but also to future proof its national currency.4 To add to the mixed signals, Tesla recently made bold moves to start accepting Bitcoin for its products, catapulting the stability of the crypto market to a whole new level5 and negating Secretary Yellen’s claims less than a month later.
Acceptance and implementation of cryptocurrency are inconsistent, making it hard to conduct any type of analysis. Cryptocurrency is being driven by industry and governments to different places. What can we learn from these moves and decisions? It can be argued that a major contributor to the success of any emerging technology is the adoption rate. In the case of cryptocurrency, this has meant mass adoption and valuation based on speculation. The amazing thing was that this acceptance was not perpetuated by any one corporation, government body or industry—it was largely adopted by individuals with the help of social media.
Another contributing factor to a technology’s success is the problem-solving aspects. What problems does cryptocurrency solve? The centralization of any system can cause a single point of failure, slow down processes or be more easily manipulated. Cryptocurrency borrows the decentralization capabilities from blockchain to quell these issues and solve the perceived problem. Last, but not least, is the ability to capitalize on new technology. As mentioned earlier, cryptocurrency is currently lucrative and one of the main reasons why blockchain is being so heavily researched and adopted. As this has occurred it has also caught the eye of regulation entities and corporations alike, which adds a new level of difficulty for adopters and implementations of the technology.
RISK HAS TO BE TAKEN TO HELP PERPETUATE INNOVATION, AND IF WE ARE NOT WILLING TO TAKE THAT RISK, SOMEONE ELSE WILL.
From the cultural aspects to the actual nuts and bolts of the technology, cryptocurrency really is an amazing study in all that can be gained and lost in early adoption and acceptance of emerging technologies. For example, if one had invested US$100 into Bitcoin in 2010, it would currently be worth approximately US$57 million as of the writing of this article. That is a hard number to ignore. With all of this being said, someone could crack Bitcoin’s blockchain causing a massive crash in the crypto market in the near future. And therein lies another danger of early adoption—untested and unexplored risk. But tried and true methods of doing things will not last forever. Risk has to be taken to help perpetuate innovation, and if we are not willing to take that risk, someone else will. The world and technology progress regardless of how hard we dig in our heels and try to keep traditional institutions and processes going. Even if Bitcoin and all crypto were to fail tomorrow, another technology with the same idea of decentralized currency would succeed it, and with great speed and agility thanks to the leaps and bounds made by its predecessor. Personally, I would not have it any other way.
Editor’s Note
Dustin Brewer owns and invests in cryptocurrency and crypto assets.
Endnotes
1 Brewer, D.; “Blockchain: Love It or Hate It,
It’s Here,” ISACA® Journal, vol. 2, 2020,
https://www.isaca.org/archives
2 Iredale, G.; “List of Top 50 Companies Using
Blockchain Technology,” 101 Blockchains, 26 December 2020, https://101blockchains.com/companies-using-blockchain-technology/#:~:text=BBVA%20is%20one%20of%20the,
the%20deal%20of%20%E2%82%AC150m.
3 Robertson, H.; “Janet Yellen Suggests
‘Curtailing’ Cryptocurrencies Such as Bitcoin,
Saying They Are Mainly Used for Illegal
Financing,” Market Insider, 20 January 2021,
https://markets.businessinsider.com/currencies/news/bitcoin-price-cryptocurrency-should-be-curtailed-terrorism-concerns-yellen-2021-1-1029985692
4 Anstey, C.; L. Chen; H. Xie; Y. Zhao; D. Wei;
O. Kharif; Z. Huang; “China’s Digital Currency
Could Challenge Bitcoin and Even the Dollar,”
Bloomberg Businessweek, 1 June 2020, https://www.bloomberg.com/news/articles/2020-06-01/china-is-making-cryptocurrency-to-challenge-bitcoin-and-dollar
5 Salzman, A.; “Not Just Tesla: Why Big Companies
Are Buying Into Crypto-Mania,” Barron’s, 11 February 2021, https://www.barrons.com/articles/not-just-tesla-why-big-companies-are-buying-into-crypto-mania-51613069805
Dustin Brewer, CISM, CSX-P, CDPSE, CEH
Is ISACA’s senior director emerging technology and innovation, a role in which he explores and produces content for the ISACA® community on the utilization benefits and possible threats to current infrastructure posed by emerging technologies. He has 17 years of experience in the IT field, beginning with networks, programming and hardware specialization. He excelled in cybersecurity while serving in the US military and, later, as an independent contractor and lead developer for defense contract agencies, he specialized in computer networking security, penetration testing, and training for various US Department of Defense (DoD) and commercial entities. Brewer can be reached at futures@isaca.org.