Bitcoin Adoption Curve - Where are we now?
Also, Big Bitcoin announcement, Bitcoin in pop culture
January 3, 2009. The first block of 50 Bitcoins was mined, now known as the “Genesis Block.” Satoshi Nakamoto had released his Bitcoin whitepaper just two months prior. So, twelve and a half years have passed, and millions of people have bought the “Orange Coin.” Crypto exchanges are everywhere, ETFs are popping up, and big companies are putting Bitcoin on their balance sheets. There’s a Bitcoin ATM in my neighborhood, and probably yours. But where do we stand in the process of mass Bitcoin adoption?
Bitcoin’s Adoption Curve:
Innovative technologies often follow a typical adoption curve, sometimes called an S-curve. This curve breaks down the global adoption of any technology into five general phases.
Innovation or Experimental Phase - This period is relatively short, and there is only minor adoption taking place. Only a small percentage of the target market of a technology may be penetrated. In the case of Bitcoin, developers were experimenting with the code, and trying it out as a medium of exchange. This was mainly during the years of 2009 and 2010. Bitcoins had no substantial value at this time. (See Issue No. 3. Bitcoin Pizza Day.)
Early Adopters Phase - For Bitcoin adoption, this was probably the period of 2011 through 2013. The potential of the new technology begins to show, though there were some bumps in the road. As chart 2 shows, true visionaries take over in this space, and applications start to emerge, such as coin exchanges, merchant processing and coin wallet providers. Though the Silk Road dark web site was busted after selling all sorts of illicit products for Bitcoin, entrepreneurs started to take notice of the technology. And, even though the Mt. Gox crypto exchange was looted for 850,000 Bitcoins, more and better exchanges started popping up.
Early Majority Phase - As shown in Chart 1, we are right now in the first half of the Early Majority Phase. Bitcoin has probably only penetrated about 25-30% of its potential market. This phase typically takes longer than the first two phases and will attract more investors to the space. While the early adopters phase is dominated by the visionaries, this stage sees the entry of the “pragmatist” investors. For large corporations, hedge funds and institutions, it may be hard to ignore the potential returns of Bitcoin, but they will only take the plunge after performing much due diligence. Thus, the term “pragmatists.”
We’ve seen the involvement of some major corporations in Bitcoin, but many of these are tech-centric in nature. MicroStrategy, Square and Tesla each put significant monies from their cash reserves into Bitcoin in the past year, amounting to over $5 billion.
Late Majority Phase: - Most of the growth in the adoption of a new product or technology occurs in the early and late majority phases. The late majority phase is marked by the entry of more conservative people and institutions in society, and it’s no different with Bitcoin. You hear reports of major corporations “beginning to explore getting involved in crypto,” or governments appointing commissions to “study digital currencies and blockchain technology.” These players are crucial to the adoption of Bitcoin, but will move slowly and carefully. Though many (and I) believe this holds great potential, we are not there yet. (Although, see Bitcoin News Item, below.)
The “Laggards” Phase - I know, that sounds like quite a derogatory term to use in describing the final phase of adoption. The laggards are slow to realize the potential of new technologies. Through the first four phases, they were quite skeptical, and they still are. Economist John Mauldin calls this stage in the Bitcoin cycle the Global Consumer Adoption Phase. With increased innovation that may make it easier to buy, hold and spend Bitcoin, Mauldin contends that more merchants will be able to accept Bitcoin and volume and awareness will increase exponentially.
Bitcoin versus the Internet - where are we?
Bitcoin has now been around for twelve years, so it is fair to compare its adoption to that of the internet in 2005. So, how’s Bitcoin stack up? Former Google manager Michael Levin says that, when compared to the internet, mobile phones, and virtual banking tools, Bitcoin’s adoption rate is much faster. Levin estimates that Bitcoin will have 1 billion users by the year 2025. Levin said:
“Despite the fear mongering, Bitcoin, like all innovative technologies before it, is following a predictable and transparent adoption curve, albeit, at an accelerated rate.”
Levin’s opinions are shared by many Bitcoin analysts and developers. Willy Woo, noted cryptocurrency analyst, believes that if Bitcoin’s adoption continues to grow at its present rate, within four years 30% of the world’s population would own Bitcoin. Woo cites Bitcoin’s ten year history of 2.2x per year of growth.
“The adoption curve of Bitcoin is faster than any other global infrastructure rollout before it.” - Willy Woo, crypto analyst.
“Just PayPal me some Bitcoins” - Bitcoin in Pop Culture
Bitcoin references started popping up in television shows, movies and music very early in crypto’s existence. In doing a little research into this, I admit to being a bit surprised as to how often Bitcoin had been mentioned, and even featured, in TV shows. And, as to how early these mentions appeared. The quote above, “Just PayPal me some Bitcoins,” mixed technologies aside, is more hilarious now than when it aired on Parks and Recreation in 2014. Character Morris Lerpiss spoke that line, which lives on in Bitcoin Twitter.
The earliest reference to Bitcoin in a television series is believed to be the season 3 episode of The Good Wife, which aired on January 12, 2012. The episode was called “Bitcoin For Dummies,” as most of the cast was getting their first lesson on crypto. Attorney Alicia Florrick, played by Julianna Margulies, defends an attorney who won’t reveal the name of his client. That client happens to be wanted by the US Treasury for creating a new digital currency called….Bitcoin. The cast delves into the crypto space in depth, discussing mining, trading and Bitcoin prices. (It was $3.00 at the time!)
No discussion of any aspect of pop culture can be complete without mentioning The Simpsons, mainly because the show has aired since 1989 and also because it touches on all areas of current events. Krusty the Clown uttered the first Bitcoin reference in the show, way back in 2013, blaming his poor financial situation on bad luck with “the ponies and the Bitcoin markets.” The show later featured Bitcoin in several episodes.
The Showtime series Billions, about a ruthless New York hedge fund headed by one Bobby Axelrod, gets into crypto quite a bit. Not surprising, since one of the show’s creators, Ben Mezrich, also penned the best-selling book Bitcoin Billionaires. (See Issue No. 2!) One outrageous episode in 2020 depicted Bobby’s 13-year old son setting up a crypto mining operation in his prep school basement. Unfortunately, when young Gordie and his pals flipped the power switch on their operation, they knocked out the power on the campus and in the surrounding neighborhood.
The Netflix series Startup features an unlikely trio of entrepreneurs in Miami seeking financing for their new cryptocurrency, Gencoin. Stanford dropout Izzy Morales has developed the code that may change the world, and she ends up partnered up with an out-of-work banker and a drug dealer from the other side of the tracks, Little Haiti. Not all of their seed money is legit, and there’s a crooked FBI agent trying to track them down.
“I’ll take technology for $500, Alex.” Jeopardy has had several refences to Bitcoin, including the answer:
“A digital currency in which transactions can be performed without the need for a central bank.”
Child actor turned tech entrepreneur Brock Pierce not only backed several crypto startups, he also became a Bitcoin billionaire, reportedly, and ran for President in 2020 on the libertarian line. Pierce had played the younger Gordon Bombay in the Mighty Ducks movies.
The season 11 episode of The Big Bang Theory, called The Bitcoin Entanglement, shows Leonard, Howard and Raj discussing the recent rise in the price of Bitcoin. They suddenly remember that they mined a large amount of it some years back, and may now be sitting on quite a stack. Predictably, they search every laptop and device they own and, of course, can’t locate their private keys (password).
“Member everybody used to to bite Nickel,
Now everybody doin’ Bitcoin.” - Eminem.
Bitcoin News Item of the Week:
El Salvador’s President Nayib Bukele plans to make Bitcoin a legal currency in the nation. Citing the millions of citizens with no access to banking services, Bukele expressed confidence that the move will promote financial inclusion as well as protect their economy from fiat currency inflation. Bukele made the announcement via Zoom at the Bitcoin 2021 Miami conference, revealing his country’s partnership with the payments company Strike, headed by 27 year-old Jack Mallers. Though El Salvador is a small country, it was a big announcement for Bitcoin’s adoption journey.
Note - Within two days of the El Salvador announcement, four other nations strongly hinted that they would follow suit. Paraguay, Argentina, Panama, Brazil. Stay tuned.
Bitcoin 2021 Miami - If you missed the conference, check out The Bitcoin Files Twitter feed for the top quotes from great presenters, and see the special Bonus Issue that went out last Friday night. Awesome stuff! Winklevoss, Pomp, Saylor, Ron Paul, many more.
Issue No. 7 June 11, 2021
Rick Mulvey is a CPA, forensic accountant and crypto consultant. He writes about all things Bitcoin, runs marathons, yells at the Yankees and Giants, and tries to make homemade wine.
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