Title The S Curve’s Secrets Bitcoin Adoption Takes Longer Than Expected.
This is an opinion editorial written by Bitcoin Graffiti, a software developer and graffiti artist.
In 1714, the British Parliament passed the Longitude Act, which offered a reward of £20,000 (equivalent to more than $1 million today) to anyone who could accurately determine longitude at sea. Since the beginning of global trade, captains had struggled with poor navigation. While sailors could easily measure latitude by gauging the sun’s height, determining longitude was much more difficult, and inaccurate techniques caused ships to veer off course. Without visual bearings, sailors were essentially sailing blindly on the open seas. This increased travel time, leading to scurvy, delays, and ships crashing on rocks and losing both crew and cargo. Fortunately, a brilliant Brit named John Harrison came up with the solution – the chronometer, a clock that could keep accurate time on the volatile seas. Harrison’s invention outperformed crude astronomical techniques that relied on clear skies, number tables, and hours of calculation. However, his innovation was not adopted immediately. According to “Longitude” by Dava Sobel, it took until 1828 for the Board of Longitude to be disbanded and the chronometer to become widely adopted. Why did it take so long?
Going Beyond The S Curve
“…the diffusion of innovations is a social process, even more than a technical one.”
-Everett M. Rogers, “Diffusion Of Innovations”
In 2008, another timekeeping device was invented by Satoshi Nakamoto. Bitcoin is a decentralized clock in cyberspace that enables accurate economic calculations and financial navigation in the uncertain waters of life. While its properties are superior in the eyes of its users, its rate of adoption is not as spectacular.
Many claim that Bitcoin is on the brink of crossing the chasm: “This is the internet of 1995!” But in our excitement, we expected iPhone-like adoption. While ideas spread faster than ever before, considering this trend as the sole variable governing adoption rate oversimplifies the situation. The story of longitude shows us that even when an innovation is an obvious solution, it may take longer than expected to catch on.
Everett Rogers was the social scientist who popularized the observation of how innovations diffuse across social media through a normal distribution. By aggregating adopters over time, the uptake looks like an S curve that rises sharply after a critical mass of users has been reached. This model gained popularity early in this century as it explained the exponential growth of mobile phones and the internet.
But Rogers’ research encompasses more than just this memorable model. In his book “Diffusion Of Innovations,” he identified five parameters that govern a technology’s adoption rate.
The Five Perceived Attributes Of Bitcoin
One: Relative Advantage
“Diffusion is a particular type of communication in which the message content that is exchanged is concerned with a new idea.”
-Rogers, “Diffusion Of Innovations”
Bitcoin’s perceived value is determined by two factors: needs and price. To have a need for Bitcoin, one must first experience a problem. The issues with fiat money have long been recognized within the cypherpunk and sound money communities, which were the first to adopt Bitcoin. But outside of these social groups, awareness of the problem of dollar debasement is low. A lack of financial education and immersion in fiat currency leads people to not seek solutions. Without a proper diagnosis, no one needs a cure. Bitcoin’s price is slowing adoption, and unit bias makes the coin appear expensive. People don’t realize it can be subdivided. The price is also volatile, obscuring its store-of-value function. This is in contrast to other adoption cases, such as mobile phones, where users instantly perceive value – the ability to call anyone, anytime, anywhere. With Bitcoin, 80% drawdowns and years of “number go down” are not uncommon. It takes a high level of abstraction to see Bitcoin’s value and a strong conviction not to be shaken out of the market.
Two: Compatibility
“Potential adopters may not recognize that they have a need for an innovation until they become aware of the new idea or its consequences.”
–Rogers, ” Diffusion Of Innovations ”
According to Rogers, a new technology typically starts out as a niche product for innovators and needs to be reinvented to find product-market fit. Bitcoin is currently only compatible with financially educated individuals and is still considered a niche product in the innovator stage. To reach more early adopters, Bitcoin needs to be reinvented for different global markets. Currently, there are two distinct paths emerging for Bitcoin: its narrative and medium-of-exchange (MoE) usage. These narratives are designed to make Bitcoin more compatible with specific social groups that speak different languages. With increased understanding, these groups will drive the creation of new uses and applications.
Three: Complexity
Bitcoin is still relatively complicated compared to other technologies like the mobile phone. New software developers experience a steep barrier of entry when trying to implement Bitcoin in applications, and the ecosystem is not as well developed as regular web development. Although upgrades continue to make Bitcoin more accessible, we are still waiting for the out-of-the-box killer app.
Four: Trialability
“One must learn by doing the thing, for though you think you know it, you have no certainty until you try.
–Sophocles, ” The Trachiniae ”
The trial period for Bitcoin may be as long as the reward halving, and true advocates are only minted after enough time in the market. Though trialability of Bitcoin is easy — one can just buy a little — the overall net benefit is only great with a larger purchase, proving the point that the full trial period might be as long as one halving.
Five: Observability
Bitcoin is a digital currency that is not easily visible to the naked eye. It is not like a Ford Model T driving on the roads where its advantages can be easily seen. People often only hear about Bitcoin in the news when it reaches its all-time highs, which usually don’t last very long.
Adoption of Bitcoin will increase as more visible applications emerge. In the future, Bitcoin miners may be integrated into power plants and homes, and people may be able to send Bitcoin to their friends on the street using their phones. They may also see Lightning buttons on a Nostr client and discover that they can zap satoshis to their favorite influencers. Additionally, it is difficult to spot increased wealth through Bitcoin. Unless Bitcoiners start wearing expensive clothing and driving luxury cars, rich HODLers are hard to observe. However, wearing a giga-chad t-shirt might not be in vain and could potentially speed up the spread of Bitcoin.
Reward
Harrison spent 20 years working alone on his timekeeper. His invention was hindered by bureaucracy, but he eventually received a £20,000 bounty. Smart entrepreneurs were able to scale his design for mass production, and chronometers were brought aboard ships where they saved time, cargo, and lives. It took a long time, but the chronometer eventually became widely used. Today, people are financially lost, like ships sailing blindly through the dangerous waters of life, unable to calculate their finances. We are living in the pre-science Stone Age of money. Future generations will look at us with dismay. However, this is about human psychology and how people embrace new ideas. In hindsight, world-changing technologies always seem obvious. We are in the midst of a paradigm shift, the ignition of a scientific revolution, and it is difficult to see where things are going. Bitcoin will not spread as rapidly as Facebook, the internet, or the iPhone. Much needs to be built, reinvented, and translated before the masses get on board. Like with electricity, base layers are hard to understand without the actual appliances. We will get there, but it will take longer than you think.
This is a guest post by Bitcoin Graffiti. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or blockchain.
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