Like many technological advances before it, cryptocurrency has spawned a rapidly developing industry. In this highly competitive field it is important to have every advantage you can get. Anyone can put together a team of individuals and give themselves impressive sounding titles, but few have watched the process of innovation take place first hand, because most are too young to remember the internet and personal computer booms, as well as the subsequent bubbles. The same cannot be said for DNotes co-founder Alan Yong, however - a man who has 40 years of business experience, including 20 years as a pioneering innovator in the software and personal computer industries.
His company, Dauphin Technology, went head-to-head with industry giants such as Apple computer Inc., Tandy Corp., and Motorola in the early days of the personal computer revolution. Since he has seen firsthand the trials and tribulations that projects in emerging tech sectors can face, he knows better than most how to avoid the pitfalls that threaten most entrepreneurs.
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Today we sit down with Alan and ask him a few questions about the similarities between early PC days and this current stage of the cryptocurrency development process.
What similarities do you see between the early computer industry and cryptocurrency? What is different?
Yong: “The huge potential of both industries is obvious to many people at the formative stage and the barrier to entry is low. These factors enable many less qualified participants to jump in with a “me-too” mindset – under-prepared and ill-informed with a wishful thinking that they can make it too. In such an environment, the industry becomes very competitive and over-crowded quickly. Like the laws of nature – it evolves to be a “survival of the fittest” space where many vanish and others are absorbed by the dominant few.
While there might have been exaggerated claims of their capabilities and size such as “we are the finest and largest PC manufacturer with the best price” when they were assemblers of computers parts; the emerging PC industry conduct was reliable and trustworthy. Building a trusted brand to gain repeat customers was important. The cryptocurrency world, on the other hand, has been more like the “wild west” - with little restraint on bad conduct under the cover of anonymity. With a great deal of investment and get-rich-quick mentality, scams and misrepresentations are rampant. The technology itself is much more complex for the average participant to understand, and thus, an easy exploit for those who thrive on taking advantage of those who might be new to the industry.”
At one point, there were thousands of computer companies and startups, and now there are thousands of cryptocurrencies and blockchain projects. Would you say one industry is more over-valued than the other, based on speculation, at this stage of the development process?
Yong: “There were indeed thousands of computer companies and start-ups within the first few years, leading to explosive growth of a vibrant ecosystem supporting the industry. Much like today, there were many publications, conferences, and industry consultants. But most them became irrelevant and few still exist today. The digital currency space with its under-pinning blockchain technology, along with the catch-all Fintech (Financial Technology), is significantly more massive and disruptive.
The value exchange of the personal computer business was dependent on the delivery of tangible goods and services with little accommodation for under-delivery or failed delivery. On the other hand, cryptocurrency, by itself, has little to no intrinsic value. Unless there is a link to fundamental value, it is very speculative and volatile, and in many cases overvalued. Sadly, speculators’ mentality is not based on value but based on hope that it could be worth significantly more to the next buyer.”
Obviously, the personal computer was a groundbreaking innovation that has changed many lives. Will blockchain, and specifically cryptocurrency, have that same level of impact on the world?
Yong: “I believe that the overall impact will be more massive, far-reaching, and disruptive; creating a generational opportunity for those who know how to participate at the right time.
Unfortunately, blockchain seems deceptively simple yet conveys certain prestigious connotation – so many want to be associated with it without legitimate justification. There will be many failed projects involving situations without a sound business model backed by a knowledgeable team.
As a package – the digital currency, the underpinning blockchain technology, and the global payment system using the ingenious peer-to-peer distributed ledger consensus system will have enormous world changing implications. It will be decades before the full array of benefits can be realized.”
Does cryptocurrency have more competitors since it threatens to disrupt the financial/banking status quo, which has operated in relatively the same way since its inception?
Yong: “The banking and financial services industry, including credit and debit card, along with global payment and settlement network is massive, but outdated. Tens of thousands of competitors will be competing for a piece of a very large pie. The smart ones will take advantage of their lower cost structure and focus on a niche that offers profitability and the potential for quick scalability. It will be very disruptive. The banking industry is aware of that and actively repositioning itself to participate in their version of a private blockchain. The centralized nature of the banking industry coupled with restrictive regulations will be too burdensome to mount an effective defense. Consequently, there will be many opportunities for innovators.”
Most computer companies went out of business, do you think the same will happen with cryptocurrency endeavors?
Yong: “There is no doubt that it will be the case. This is a very complex industry with many moving parts that can be promoted in different ways. Thus, it is impossible to separate reality from utopian ideas. The industry is already overwhelmed with ideas and published information, most of which few can understand. Furthermore, there are many bad actors in the mix of impatience investors overly anxious for quick pay-offs. “
What is the most important lesson you learned during the PC boom?
Yong: “Don’t be a “me too”. Low cost barrier to entry can be a curse rather than a blessing. It may cost little to be in business but if you can hardly make enough money to stay in business you are burning up the best years of your life. You must be able to differentiate and be equal to your competitors quickly. If you are not among the best, you will fail. Doing the right thing at the right time is vital in a highly competitive and fast moving industry where the majority will fail.”
Is there any advice you would like to give to others in the cryptocurrency industry?
Yong: “This industry is still in its infancy. The technology is still evolving and ahead of regulations. Strategic positioning is invaluable at this stage; therefore, don’t get ahead of yourself and use up your resources too quickly. Perfect timing is the key to success as much as poor timing is a major contributor to failure.
Long-term investors should be very selective to include a few candidates that are truly invested for the long-term with a compelling and clearly articulated vision. This is an emerging industry of sizable scale and scope. The right situation has enormous room for growth. But only a few will be successful enough to dominate.”