Crypto Isn’t Dead, We Are Just In Stage Four
Understanding the Kubler Ross 5 stages of Grief and the Theory of Change (ToC) are essential in navigating through the current crypto-market
Not surprisingly these last weeks I am inundated with telegram messages, tweets and emails that are a mix of fear, gloom and outright depression (below). As a physician I hear a collective narrative about the current market that includes an etiology (FOMO, FUD won, speculation, scam), a diagnosis (RIP, “ded”) and a prognosis (yeah man it’s over, nobody willing to save the market), which all look pretty grim.
In addition, I have been reading many post-mortem summaries and lists of defunct projects and currencies, as well as in-depth financial, economic and technical reports trying to explain the current state of affairs.
However, very few if any of these reports address the reasons why are we reacting this way. To understand this, I would like to review Dr. Kubler Ross Five Stages of Grief model and contextualize the crypto state-of-affairs within the Theory of Change (ToC).
Who is Dr. Elizabeth Kubler Ross and What is the 5 Stage Model?
Dr. Elisabeth Kubler Ross, a Swiss-American psychiatrist, dedicated her career to understand and improve end-of-life experiences. She was most known for her book On Death and Dying in 1969, where she proposed the now famous Five Stages of Grief as a normal reaction to loss and change.
Dr. Kubler Ross posited that when confronted with loss we undergo five stages: denial, anger, bargaining, depression and acceptance.
This “stage theory,” as it came to be known, created a paradigm for how Americans die and how families grieve. Decades later, she wrote a follow-up book called “On Grief and Grieving” (2005), explaining in detail how the stages apply to mourning and change (below).
We can apply this model to understand the myriad of explanations regarding blockchain and cryptocurrencies.
Stage 1 is Denial:
Many outside the blockchain community that think that Blockchain isn’t or was never a thing, are ignoring the fact that the impetus behind Blockchain was to replace the centralized financial institutions with an attack-resistant, collusion-free, peer-to-peer decentralized system. The 2008 financial meltdown was not just a banking crisis, but rather a failure of representative oversight, signaling the beginning of a decentralized holacratic movement. (I have written about the intentionality of Blockchain here).
Stage 2 is Anger:
There is plenty of anger out there. Since the Silk Road affair, Blockchain and Bitcoin have never been able to get rid of its illegal or ‘scammy’ reputation in the eyes of the authorities or the general public, despite the fact that ICOs for example, account for less than 2% of the SEC lawsuits.
Furthermore, even though the current cryptocurrency losses cannot be entirely divorced from the losses in the Stock and Housing markets, it is very difficult to discuss with investors the advantages of investing in cryptocurrencies or about the favorable network effects of ICOs.
Stage 3 is Bargaining:
The ever evolving token taxonomy is not only a sign for a maturing domain, but also an indication that the community is going through the healthy stage of bargaining. ICOs are now replaced by STOs and after security tokens were the 2018 favorite, now Stablecoins are the next best thing for 2019. Whatever the next acronym will be- DAO, DAC or DAICO, new words are new concepts and are part of the change to come.
Stage 4 is Depression:
Depression, seldom alone, is frequently intensified by fear and may result in “financial suicide”, be it irrational investment, early selling, or portfolio liquidation. Having said that, the real question to ask is: what are we really depressed about? Bad investments, bad technology or rather bad community behavior?
Stage 5 is Acceptance:
Whereas acceptance is the final stage of grief, we cannot reach it unless we completely go through all the previous stages. Acceptance is a multi-step process that includes an initial positive engagement with the new reality, followed by the creation of new capabilities that allow us to learn how to adapt. Once we are confident with our new skills (like mastering crypto), education and knowledge dissemination become the next crucial steps in our transition and integration in the new world.
Theory of Change (ToC):
Theory of Change emerged from the field of program theory and program evaluation in the mid 1990s, as a new way of analyzing complex initiatives aiming for social and political change. It focuses not just on generating knowledge about whether short-term change is effective, but rather how does the change process unfold while placing most attention on long-term goals.
In that sense Blockchain is not just a new general purpose technology, that allows us to do what we already do better, faster and cheaper. Blockchain is a new institutional technology that raises complex questions in economics, public policy, law, sociology and political science.
Because blockchain is a new way to coordinate economic activity and facilitate cooperation between individuals, it opens up new opportunities to build communities that were previously closed off due to high data and transactions costs.
Final Thoughts:
Whereas understanding past and current markets is important as new trading instruments emerge, Blockchain must be spoken as a new institutional technology, that transforms both economic activity and social organization.
For many industries, blockchain will radically redefine corporate boundaries allowing individuals to trade their talents and skills in an environment devoid of big business. This will cause a decline of shareholder capitalism and will have ricochet effects that will put new pressures on employment, inequality, political power and the regulatory state, while opening up vast new opportunities.
So who is dead now? Crypto? or the Old World?
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