Morgan Housel, is a gentlemen that used to write for the Wall Street Journal and is now a best selling financial and investment author with over six million books sold worldwide. He's written a few good books however, his defining work is ‘The Psychology of Money’. I've written a piece on the book and how it's actually changed my entire investing philosophy. While he was publicising this book in 2021, I heard on a podcast that he has a theory called “The 10 stages of what eventually becomes a globally renowned technology”. I wanted to write small article about this because I believe this correlates incredibly well with Bitcoin and cryptocurrency.
Morgan Housel talking at the Burgundy Forum in Toronto in May, 2023.
The 10 stages of what eventually becomes world changing new technology
1. I've never heard of it.
2. I've heard of it but I don't understand it.
3. I understand it but I don't see how it's useful.
4. I see how it could be fun for rich people but not me.
5. I use it but it's just a toy.
6. It's becoming more useful to me.
7. I use it all the time.
8. I could not imagine life without it.
9. Seriously people lived without it.
10. It's too powerful and needs to be regulated.
This is true for almost every big invention. Where we are on that scale, I’ll let you decide.
The two that are most interesting to me was the invention of the car, and the aeroplane. Which when both of those came out in the early 1900s the first reaction to those was “I don't understand why anyone would want this”. The first car was so inferior to the horse and the first plane was so inferior to the train, so everyone looked at it wondering what the hell it was going to be used for. Then most assumed it was a rich person's toy. If you're if you're a zillionaire “of course you're gonna have a car that you can punt around town with. I kind of get it”. Then the technology becomes better and better. Both the car and the plane’s first uses were to strap a machine gun to it for the army.
“If I had asked people what they wanted, they would have said faster horses.”
Henry Ford - 1905
Virtually nobody, not even Henry Ford or Karl Benz saw what the motor car would become, which was transporting people in numbers unseen before. The car opened up a new form of living called the ‘suburbs’, people could now drive to the city in the 1920’s and 30’s rather than live there, nobody saw that coming. It was a very long path, one that usually takes 20 years at least before people are like “oh, now I get it”.
There are so many classic examples, in the 90s there were thousands of articles written in Time magazine and in newspapers about “Why would anyone want to use the Internet?”. How could anyone possibly lug around this thing called a laptop? nobody's ever going to do that. It's easy to poke fun at those articles, and you should poke fun at them, but it's actually common for virtually every new technology because the public cannot fathom what it's going to eventually become.
We should be less quick to cynicism and scepticism around new technologies. It's also very common, historically, that people say we haven't had a big invention for 30 years. “We used to innovate, but over the last 30 years what can you think of that we've actually created?”. That's a very common view, and usually what's happening is that it's not that we haven't invented in 30 years, it’s that it takes 30 years for us to recognise any invention. We look back today, and we think “Yes, the internet was big.” But the household dial-up internet was released about 30 years ago, but if you go back to the 1990s, they again were saying “We really haven't invented much in a long time”. There is always that lag in how long it takes the masses to understand how big a new technology is going to be.
In 2034 we're going to sit there and say “oh that Bitcoin is good, but who can afford it at $5 million?”.
No technology in the last 125 years has been acknowledged as quickly as Bitcoin. But you’re still early. When we were inventing the car, the aeroplane, the transistor, the radio, the microchip, the Internet, very few people knew at the time, what it was going to become. It takes decades for the masses to understand, don’t follow the crowd and wait, start buying. Thank me later.
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