The Super Credibility Curve

Key takeaways

  • When new trends and innovations come about, we tend to overestimate the change they will cause over the first 2 years and underestimate the change they will cause over the next 10 years.
  • This happened with the railroads in the 1830s, with the dotcoms in the late ‘90s, and many other innovations over the years, and Blockchain with its Bitcoin cryptocurrency is the current trend that’s causing a stir.
  • There’s a graph called the Super Credibility Curve that illustrates this phenomenon of overestimating and underestimating the change that will occur. Bitcoin has taken its rapid rise to the peak of these over-inflated expectations that occur early on and is now somewhere down around the bottom in a trough of disillusionment.
  • At some point, Bitcoin will begin to move along a slope of enlightenment and will level off at a productivity plateau. Wait a year or two for it to pull out of this trough and move up before getting seriously involved.

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10.” That’s a quote from Bill Gates and it applies to a number of different trends and situations, but I’m thinking about Blockchain, in particular. Other things in the past, such as railroads back in the 1830s and dotcoms in the late ‘90s, among others, are examples of this tendency to overestimate and underestimate the magnitude of change.

The Super Credibility Curve

I have a graph to share with you that explains how this whole thing works. It’s called a Super Credibility Curve.

You see Expectations on the vertical axis and Time on the horizontal axis.

As time moves along, at some point, there’s an initial innovation trigger. With Blockchain, the trigger was cryptocurrency in the form of Bitcoin. As excitement builds, expectations become over-inflated and top out at this Peak of Inflated Expectations. This may be what happened with Bitcoin last year when it rose way up to almost $15,000. Then the expectations plummet rapidly to the Trough of Disillusionment, which is probably where Bitcoin is now, at around $3,000. Eventually, there’s a Slope of Enlightenment that levels off into a Plateau of Productivity.

Blockchain is on its way and it’s with us. But what is it, exactly? Let’s make it easy.

Do you fully understand the internal combustion engine in the car you drive around? Probably not. What you do understand is that you get in the car, turn the key, and the engine starts. Then you use the gas pedal, brakes, shifter, and mirrors to drive it. That’s all you really care about—driving.

Let’s try to make Blockchain as simple as that. Basically, it gives you a new way to look at the value of something. You have a new way to transact business with people, so it’s an immutable distributable ledger. I wouldn’t go beyond that.

Where is it applicable? It looks like one of the areas it’s currently developing is real estate. It works like this: you take a piece of real estate on the Blockchain and break it into a bunch of tiny parts. Then you could invest $100 in one of those parts, for example, and still be liquid. This means all of the parties involved agree day-to-day on the value of that piece of real estate. You could buy and sell real estate in a way that would be considered more of a liquid form, even though it remains an illiquid investment. When you invest in the real estate, you get a security token, which represents ownership in a real world asset. It will be interesting to see how that actually plays out.

There are a lot of these Blockchain transactions being applied all over the place. Recently, when I was at Abundance 360, they showed us a few of these. Wait a year or two before you really get serious about it. It’s coming up that Slope of Enlightenment at some point in the future. Until next time, enjoy.

Gary


Gary Klaben is in our Glenview, IL office and serves our clients who are now located all over the country.  He has over 30 years of experience and is the author of Changing the Conversation, Wealth of Everything and co-author of The Business BattlefieldWhether advising his clients, mentoring his team, or coaching entrepreneurs, he is always simplifying complexity and motivating others to take the next action that’s right for them.

Learn more about TransformingWealth™ , our proprietary approach, designed to get your arms around the big picture so you can make informed financial decisions. Ask Gary about Coyle’s TransformingWealth Preview Meeting, and schedule a complimentary consultation and start living the Good Life Managed Well™.

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All information is from sources deemed reliable, but no warranty is made to its accuracy or completeness.   This material is being provided for informational or educational purposes only, and does not take into account the investment objectives or financial situation of any client or prospective client.  The information is not intended as investment advice, and is not a recommendation to buy, sell, or invest in any particular investment or market segment.  Those seeking information regarding their particular investment needs should contact a financial professional.  Coyle, our employees, or our clients, may or may not be invested in any individual securities or market segments discussed in this material.  The opinions expressed were current as of the date of posting, but are subject to change without notice due to market, political, or economic conditions.

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