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“We have never made the mistake that so many others make: confusing their product with the device that delivers it.”
– Michael Bloomberg
I’m old enough to remember when a Bloomberg Terminal was a self-contained box wedged on a cluttered trading counter between a dual-receiver phone and a clacking machine for time-stamping order tickets.
The chunky keyboard had colorful buttons for the most commonly used functions, a squawk box speaker, and a fun rollerball that made navigating the Terminal feel like you were playing Missile Command (an 80s arcade game, bowling alleys, and pizzerias that I was extremely good at).
But soon Bloomberg’s “terminal” was just software, displayed on the same screen as your trading system, with the same keyboard you used for everything else.
That made it less special to me, which I think would also make it less valuable. If all financial news and market prices could be displayed directly on my regular computer screens, surely everyone could provide that?
Michael Bloomberg knew differently.
Bloomberg never confused the product he was selling (information) with the device that delivered the product (a fat, colorful box). So when a better delivery mechanism came along, he quickly embraced it.
As a result, Bloomberg Terminals quickly became as ubiquitous on trading desks as empty coffee cups and Patagonia vests.
There are many counterexamples.
Kodak thought its product was rolls of film, so it ignored the digital camera (despite its invention). The actual product, it turned out, was preserving memories, and digital cameras (and now phones) are better devices for accomplishing this.
Newspaper publishers thought their product was a physical paper delivered to your home, but that was just the delivery mechanism. The real product was news and advertising, which the Internet was much better at.
Record labels thought their product was CDs, but that was just a delivery mechanism. The real product was music, and MP3s (and then streaming) delivered this better.
In both cases, the once dominant companies mistook the means of delivery for the thing being delivered—just as Amtrak confused the desire to get somewhere with the desire to travel on railroads.
Could the crypto industry make the same mistake?
The risk of confusion seems unusually high in crypto because it is unusually difficult to know what the product is.
Michael Saylor, Larry Fink, and any ETF investor will tell you that the product Bitcoin sells is a store of value – bitcoin – whose sole purpose is to go up.
Others think that Bitcoin’s product is decentralization and resistance to censorship, and that the token just makes these things possible.
ETH investors seem to have two (or more) thoughts: does Ethereum sell blockspace? A store of value token? A secure network to host real-world assets?
Or maybe we don’t have to choose – maybe Ethereum can be all of those things.
But that comes with a lack of focus: for example, the push to make ETH a store of value may be at odds with selling as much blockspace as possible.
“You should keep the most important thing the most important,” Bill Gates once advised.
Solana seems to be better at that: the community is united around a mission to get the chain as quickly as possible while remaining decentralized enough to remain permissionless.
But is that a product or a means of delivery?
Delivery devices are also important: Blockbuster and Netflix both delivered movies, but Blockbuster delivered them from stores and Netflix delivered them directly to your home.
But people go to Netflix because that’s where the movies are now, not because movies are more fun when they’re delivered over the Internet.
Likewise, people can keep going to Solana because that’s where the tokens are now.
Matt Hougan says, “Solana is the new Wall Street,” citing its technical advantages: speed, throughput, finality.
But what makes Wall Street Wall Street isn’t how fast the NYSE and Nasdaq are; that’s because that’s where the best stocks are.
The technology running these exchanges isn’t particularly valuable, and the blockchain running Solana and other ecosystems may not be either.
“If you don’t have a native digital asset in the chain,” says Mike Cagney, co-founder of Figure, “it’s basically worthless technology.”
Most chains obviously have tokens, but why would they have value if the chain itself is “basically worthless”?
Presumably because they are the best way to deliver a particular product.