If you haven’t read “Technological Revolutions and Financial Capital” (2002) by Carlota Perez, I thoroughly recommend it. It’s a boring title for a mind-blowing book with beautiful language that is almost guaranteed to trigger a sequence of “aha!” moments, whatever industry you happen to be working in.
Her main thesis is that major technological shifts follow a pattern that takes them from creation through to obsolescence, launching “golden ages” of progress and prosperity along the rather bumpy way. She divides the sequence into five sections:
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The Irruption Phase begins with an initial surge of interest in the new, shiny thing against a backdrop of stagnation and turmoil.
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In the Frenzy Phase, speculation starts to dominate the headlines as financial capital takes over while use-case exploration intensifies.
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The Turning Point tends to come as the bubble of the Frenzy Phase bursts, leading to a recession, and is usually characterized by greater involvement from regulators as well as other sectors of society.
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The Synergy Phase kicks off the “deployment period,” which leverages the investment of the Frenzy and the infrastructure progress of the Turning Point into an expansion of economies of scale with financial capital more directly tied to production.
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The Maturity Phase is the twilight of the curve as the limitations of the new technology start to generate friction, eventually leading to stagnation and turmoil.
Noelle Acheson is the former head of research at CoinDesk and Genesis Trading. This article is excerpted from her Crypto Is Macro Now newsletter, which focuses on the overlap between the shifting crypto and macro landscapes. These opinions are hers, and nothing she writes should be taken as investment advice.
The crypto industry is clearly at the Turning Point in the above framework. It’s not just the recent bursting of the Frenzy Phase that makes this obvious – it’s also the headlines that cross our screens every day, with their emphasis…
