There is a cycle applied to business and where it is in its stages of start-up to maturity. Questions are surfacing to ask if Bitcoin is moving on in its stages of the business cycle or waning to fall like a shooting star. Gartner, the world’s leading technology research and advisory firm has some answers which Coin Desk applies to Bitcoin in a featured article today.
Gartner defines it as five areas to look at the development of a new technology’s life cycle or hype cycle. First, there is the technology trigger which would be the Satoshi Nakamoto white paper released in January 2009 on the Internet. All the hype and early investors plus the bad and the ugly appeared on the Internet with Bitcoin exchanges and mining production of bitcoin. This is the stage that Gartner classifies as unproven.
Next, there is peak of inflated expectations, when Bitcoin is mined by a few around the world and the price sky rockets over $1000 in a relatively short time. There is the publicity of young entrepreneurs and over-night millionaires. Some jump on board while others watch from the sidelines. Soon there is scandal one after another through 2013 and arrest by the FBI which puts Silk Road out of business and its Web master in jail awaiting trial. Others follow in scandal, arrest and the Mt.Gox bankruptcy.
The enthusiasm wanes and the challenges become what appear as unsurmountable obstacles. It is the trough of disillusionment on the Gartner chart. Countries around the world reject it as China would not allow it into the central banking system of third party deposits, the U.S. Senate has a committee hearing in 2013 and other countries move to find where to place it. The U.S. Internal Revenue Service classifies it as property and treats it as such for tax rules applicable to long and short-term capital gains.
The Fed's Chairwoman, Janet Yellen, has spoken out about bitcoin status at a Senate Hearing in Feb. stating that, 'It’s not so easy to regulate bitcoin because there is no central issuer or network operator to regulate.' Today, Minneapolis Federal Reserve Bank President Narayana Kocherlakota indicated his interest is in it as a technology and not in its use as a currency.
Now the providers that remain entrusted with investors and consumers can implement the next stage of Bitcoin exchanges and services with satisfaction. Those who have made it through the early stages and pass disillusionment can enter the stage of enlightenment. The real work begins of defining Bitcoin as a technology of cryptocurrency for the century and will produce the second and third generation products. ATM machines are placed around the world; Venture Capitalists define structured programs and product to lift Bitcoin to the next level.
The plateau of productivity is here and it appears in mainstream. An electronics firm in Dublin pays its employees in Bitcoin, retail and restaurants in the Netherlands ban together and all accept bitcoin payment. The entrepreneurs develop business programs that begin mainstream with merchant service companies processing bitcoin transactions. Merchants, restaurants, hotels, health care and medical providers accept bitcoin. A Bit Coin map and app follow to help lead people to like-minded Bitcoin acceptance for products and services.
Bitcoin has reached a point where the serious have opened up. It is a community which has the entrepreneurs including Jeremy Allaire, Circle Internet founder and CEO, building the structure for online services and investments with the business acumen and management skills for a business firm of longevity. Another investor and entrepreneur, Barry Silbert, announced that he has placed 100,000 bitcoins in his investment trust that he established through securities regulations last year for investors who could meet the strict capital investment requirements of the SEC.
Jeremy Allaire’s focus is that, ‘I’m actually seeing the opposite of this thread – increasing levels of interest from business leaders, government, other entrepreneurs, investors.’ That is the Gartner difference between public opinion hype and the real deal advancing to the plateau of productivity.