Crypto Adoption. Not Impossible…Inevitable.

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Summary

The digital asset universe is too enormous to ignore, with a market value of $2.6 trillion. Crypto based digital assets may represent an altogether new asset class, spawning a new generation of enterprises to trade, provide, and employ digital assets in areas including as banking, supply chain, gaming, and social media. But, having said that, where are we currently in terms of cryptocurrency adoption? Is it now too late?

Crypto Today

According to a Bank of America analysis on cryptocurrencies, about 221 million individuals worldwide had traded a cryptocurrency or utilized a blockchain-based application as of June’21.

Generation Y, Millennials, and Generation Z are driving the development and usage of digital assets. These generations grew up with the internet and anticipate seamless and digital native online interactions.

In the US, it’s estimated that 14% (21.2 mil) of adults own digital assets and an additional 13% (19.3 mil) plan to buy digital assets in 2021. Notably, the average age of these potential buyers is 44 and 53% of the potential buyers are female. This is staggering growth taking into account that only in 2015, when Pew Research Center asked people if they had heard of Bitcoin, less than 50% said they had heard of the cryptocurrency.

Companies are actively researching this new technology and its uses rather than risking disregarding digital assets and applications. According to a Bank of America research, the following is a breakdown of total blockchain-related headcount (LHS) vs average blockchain-related job listings per month as of April 2021:

Theory & Reality of Mass Adoption

When a new technology replaces an old one, adoption generally begins slowly and then accelerates. This is especially true for networked technology, since the network’s effect is proportional to the square of the number of system-connected users.

Historically, we’ve seen this happen with telephones, computers, radios, smart phones, and, of course, the internet. The adoption of each of these communication networks was becoming more and more rapid. This is likely to happen much faster in the case of cryptocurrencies. As a result of technical developments in decentralized software that is inherent to the internet, a new media based on distributed ledgers and blockchain is fast emerging. Applications developed on this new software architecture appear to be expanding faster than previous technologies.

Consider Everett Rogers’ technology adoption curve concept, as outlined in his book “Diffusion of Innovations” below:

In general, individuals embrace new technology at varied speeds. Their relative adoption rates may be represented as a normal distribution, with the fundamental difference being people’s psychological receptivity to new ideas.

This allows us to divide psychological dispositions into several categories, namely:

1) Innovators (2.5%) — risk takers with the willingness and resources to attempt new ideas, even if they are likely to fail.

2) Early Adopters (13.5 %) are picky about which technology they use. They are seen as exceptionally informed about new information and, by accepting it, tend to lessen uncertainty for others about a new technology.

3) Early Majority (34%) — they take their time before embracing a new concept. They are open to new technology as long as it fits into their life.

4) Late Majority (34%) — adopt in response to peer pressure, developing norms, or economic necessity. Before they embrace a concept, the majority of the doubt surrounding it must be addressed.

5) Laggards (16%) — are conventional and make judgments based on prior experience. They either dislike or are unable to afford to take risks on new ideas.

However, the aforementioned factors are insufficient to ensure widespread acceptance; any technology must be seen to be simple to use. Technology that is too complex to learn will struggle to gain widespread acceptance.

Lets use Fred David’s Technology Acceptance Model (TAM) published in 1986 as an example:

Perceived Usefulness (PU) and Perceived Ease of Use (PEU) were examined in the basic TAM model above. Perceived Usefulness is defined as a potential user’s subjective likelihood that using a specific system will improve his or her actions, while Perceived Ease of Use is defined as the degree to which the potential user expects the target system to be simple to use.

This model has been used over the years by various researchers to explain the adoption technology systems.

Case Study: DeFi on the Blockchain

Perceived Usefulness:

Decentralized Finance — DeFi lets anyone with internet connection globally to gain access to any global currency, earn yield on deposits or get access to loans instantly.

Perceived Ease of Use:

On top of DeFi, there are user-friendly applications that disguise all of the technological complexity behind the scenes. Take, for example, SwissBorg, which utilizes decentralized finance and makes it extremely user-friendly. Simply send funds to the SwissBorg platform by standard bank transfer, log into the app, click a button, and voila, you’re earning up to 15% annual returns, paid daily, on your cash savings or cryptocurrencies, if you prefer.

Applying Crypto On Technology Adoption Curve

Considering all of the above we can assume comparison between crypto & internet at its early stage is a fair analogy. On a technological adoption curve, we may plot crypto now vs. internet in the past:

One way to model product adoption is to understand that people’s behaviors are influenced by their peers and how widespread they think a particular action is. As more individuals accept this new technology, it will increase at an exponential rate. It will sound impossible until it happens.

We can also compare adoption curves with other major technologies below:

For cryptocurrency & blockchain, we are currently in the ‘early adopter’ phase.

According to the foregoing and as previously said, adoption typically begins slowly and then rapidly grows. When everyone is connected, the adoption curve smooths out and forms a ‘S’ shape. Because we are still in the early adopter period, we can confidently project that unique users will increase by more than 15 times over the next ten years.

As with everything, time will tell.

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Crypto Adoption. Not Impossible…Inevitable. was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.