Bitcoin Similar To 1800s Gold Rush?
Present day Bitcoin and altcoin development appear to be recounting a theory that played out in the early mining industry.
As was the pattern during the actual gold rush of the 1800s, while some people took the risk and spent their time looking for gold, other folks watched on non-judgmentally and lucratively supplied the “picks and shovels” that enabled the fever-pitched masses to take a shot at “striking it big.”
Drawing on some similarities and contrasts between the actual “gold rush” and the new “digital gold rush” provides a good framework to describe how industries today are being impacted by Bitcoin.
Bitcoin evangelist and technologist Melvin Petties explains how the emergence of Bitcoin has given rise to different kinds of related endeavors, pointing out the attitude of some key players and the impact on the crypto ecosystem.
Picks And Shovels Model: Industries That Make Equipment
According to Petties, in the olden days, the absolute quantity of precious metal was not known so the risk of participation was greater. The big rewards were random yet impactful – whole towns were built from major gold strikes, which made the lure to participate even greater. People from all walks of life, even the very poor, were compelled to participate and their chances of success were arguably relatively the same.
Fast forward to the present day, Petties notes that not just anybody can make a “pick and shovel” when it comes to Bitcoin mining.
“In fact, the technology is so coveted that for the years between 2013-2015 (Bitcoin good time days) most mining equipment providers were ultimately found to be fraudulent or irresponsible in how they pre-sold equipment but never delivered it.”
Petties explains that microchip shortages were always the common scapegoat. However, the real issue was that most people who knew how to make a real pick and shovel (ASIC chip-based mining computer) held onto the knowledge, built the product, mined with it for most of its practical lifetime (innovations were happening every month and the difficulty level was rising even more rapidly due to the rush of entrants) and then delivered it to the customer only when it was virtually worthless.