Apple Watch Moment of Crypto: Ethereum
Recently, in an article I read, I noticed how similar the development process of cryptocurrencies resembled the watch market. Both Apple Watch and Ethereum are applying similar effects to the respective issues in their industries. Here, we will actually focus on both a marketing success and a difference in vision, as well as the natural evolution of user demand.
When we look at the historical process, isn’t the first thing we seek in a watch its accurate functioning? So, reliability takes precedence. Then comes the durability and longevity of the watch, which also indicates its quality. The article I mentioned earlier highlights the longstanding reputation of Swiss watch manufacturers, especially in terms of quality. Indeed, regardless of how the market changes, this perception still remains intact. However, when we look at economic data, we observe a much more volatile trend compared to the image.
The trend of plastic watches becoming fashionable alongside Seiko demonstrates that users’ needs for reliability and durability are met and standardized at a certain level, and the element of fashion comes to the forefront. Of course, the purchasing power has a significant impact here as well. But I want to focus more on the fashion aspect. Because without Seiko, luxury Swiss watch brands perhaps wouldn’t have been pushed to create plastic watches by any means. They had to adapt to compete.
As a result, the dynamics of fashion continued to stay prominent until digital watches came along. Digitals started offering both distinct designs and various functions. They differentiated themselves. However, something was missing. The capabilities of a watch itself were quite limited. Apple Watch addressed this issue by elevating the diversity of applications to a high level through phone integration. These watches are also reliable, durable, and stylish — catering to the needs that users developed over time.
Apple not only entered a market that might have seemed unrelated to its core business but also drew this competition into its own domain. Traditional watch brands suddenly saw their strength diminished since they couldn’t instantly release phones and integrate apps into their watches. Therefore, it wouldn’t be accurate to say that Apple invaded the watch industry. It essentially made itself the host by bringing the competition directly into its own arena.
Now, let’s apply the above process to cryptocurrencies. Perhaps due to the similarity in consumer needs or even economic principles, we observe a similar process unfolding. Initially, the focus was on the proper functioning of the system, indicating a need for reliability. The functioning of Bitcoin’s system was the initial point of testing and observation. Following that, the element of durability came into play. This was related to how resistant Bitcoin was to cyberattacks, and indeed, there was a successful attack on Bitcoin. However, after the changes made by Nakamoto, there hasn’t been a successful attack again. Hence, the principle of durability in the market gradually reached a certain standard over time. None of us doubt this anymore.
Later on, the dynamics of fashion come into play. With Bitcoin yielding high returns, many similar projects emerged. Unfortunately, most of these projects turned out to be scams (like Onecoin, Bitconnect, etc.), so we can’t say they created an impact akin to Seiko. However, let’s admit that the trend of cryptocurrencies emerged with the expectation of high returns. The first fashion dynamic was the BTC-like cryptocurrencies that appeared before Ethereum.
The Apple Watch effect in the crypto world comes into play with the activation of Ethereum. Because when the fashion dynamic enters a vicious cycle, similar to the watch industry, Ethereum paves a different way. Just like Apple, it demonstrates that cryptocurrencies can be used not only for money transfer but also in various other areas through applications.
If you recall, in the concluding part of the summary about watches, I mentioned how Apple positioned itself as the host. This was because other companies were not developing applications, but Apple could develop watches. Similarly here, the developments built on Bitcoin became unable to compete after Ethereum. Ethereum made itself the host.
Bitcoin, much like Swiss watch manufacturers, also tried to keep up with the trend. The Lightning Network is an application, if you look at it closely. The current BTC NFTs are similar in nature as well. However, looking at the development curve, Ethereum had already taken the lead. Swiss watch manufacturers didn’t lose their reputation after the Apple Watch, and Bitcoin didn’t lose its reputation after Ethereum. However, the shift in user demand compelled both sectors to develop applications. This allowed both Apple and Ethereum to make the potential for progress in their created lanes limitless. Because there’s always the possibility of coming up with a better app idea.
As a result, the similarity between the watch industry with its long history and cryptocurrencies with a relatively much shorter history highlights how rapidly the curve of technological development is unfolding. The persuasion process of users shortens, and as it shortens, the speed at which new demands arise increases. With an increased demand rate, more developers invest their time to meet the supply. Ultimately, dynamics that evolved over decades can mature within 1–2 years today. Such dynamic demand is extremely beneficial for innovation. The foundation of innovation in the DeFi field is built on this dynamism. However, the shortening of persuasion and maturation processes unfortunately normalizes taking excessive risks in a sector still in the experimental phase, resulting in users suffering losses in every hack. Therefore, it’s not quite possible to provide a clear opinion on which is better. The decision is yours :)
