The 3D virtual world Second Life, launched in 2003, was heralded as the ultimate development in virtual reality. It had a cult-like following and had stratospheric growth during the initial years, before stagnating. Could Bitcoin be headed in a similar direction?
Technology has a short shelf life. Speaking at the Europe Money 2020, Sebastian Siemiatkowski, the CEO and co-founder of Klarna offered his view on Bitcoin:
“Does anybody remember something called Second Life? Everybody was buying properties in Second Life, because it was this virtual world and property prices were rising. Has everybody forgotten about that? And two years later, Bitcoin comes along. What is the difference really like? I am just amazed about how short memory is.”
Once the novelty of living a second life wore off, the media, as well as companies who had invested moved on, letting the community stagnate. Although it still has a loyal community of 1 million users, Second Life attracts nowhere near the same media attention that it used to.
Second Life in essence was a social network and it was replaced by new social networks (including Facebook) which were more reliable and accessible. Second Life was innovative, but it did not solve any existing real life problem.
Bitcoin is different
Bitcoin, on the other hand, solves the vexing problem of transferring value over the internet, in a quick and cost-efficient manner. It is a disruptive innovation and existing players in the financial services industry are investing heavily in blockchain research.
The plethora of new businesses that Bitcoin has enabled – crowdfunding, crowdsourcing through micropayments, peer-to-peer lending indicate that there has been a paradigm shift.
While it is entirely possible that newer generation altcoins are more successful compared to Bitcoin, the first mover advantage and network effect cement Bitcoin’s position as the leading cryptocurrency.
Bitcoin may have its highs and lows, but it isn’t disappearing anytime soon.