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How Bitcoin Adoption Differs from Most Innovations in History
The fourth industrial revolution has come with consistent growth and adoption of technology in different fields of life. Amidst all this, the most extensive innovation of our century, Bitcoin, also surfaced on the financial markets over ten years ago.
Bitcoin is burgeoning. A decade since its inception, the average daily trading of cryptocurrencies has exceeded 1% of trading in Foreign exchange markets. It’s currently the most significant market globally by trading volume.
Bitcoin transactions alone have grown by almost 60% per annum in the past five years. Crypto had attracted a lot of public attention since 2013 when its market capitalization and transaction volume became material.
Today, we’ll focus on aspects that differentiate Bitcoin’s adoption from other inventions like dotcom, mobile phones, the internet, etc.
Forms of Technology Adoption
The diffusion of innovation (DOI) theory explains how an idea, product, or service is adopted through a system over time. Innovation adoption occurs at different rates within people or those within an organization ranging from early innovators to late laggards.
There are five significant adopters: innovators, early adopters, early majority, late majority, and laggards. These five categories follow a normal distribution, with the first 2.5% as innovators to adopt blockchain technology and the second 13.5% are early adopters. The third 34% are the early majority, the fourth 34% are the late majority, and finally, the fifth 16% are the laggards.
Before jumping into Bitcoin strategy and adoption, let us mirror what we know about the early days of technology and transformation. One of the most pertinent examples is distributed network technology, evident in the adoption of transmission control protocol/internet protocol (TCP/IP), which laid the foundation for internet development.
TCP was first incepted in 1972, then gained traction in a single-use case: sending e-mail among researchers on ARPAnet, United States Department of Defense. The traditional telecommunications and computing divisions looked at TCP/IP with skepticism.
Few imagined that it could establish texting, audio, and video connections on the new architecture. However, TCP/IP surged into wide public use with the invention of the World Wide Web in the mid-1990s.
Ultimately, it took about 30 years for TCP/IP to move through all the stages – single-use, local use, substitution, and transformation. Presently, most of the world’s valuable public companies use internet-driven, platform-based business models.
The New Infrastructure
The growth of Bitcoin infrastructure adoption can be related to a combination of intrinsic and extrinsic motivations. First, it entrenched Bitcoin’s system in idealistic notions of availing means to replace the traditional financial systems and nurturing alternative economic structures for enhanced privacy and anonymity.
Single-Use and Adoption Over Time
In the beginning, low-novelty applications that create cheaper, better, and highly focused solutions for most technologies only have a single-use. Most technologies like mobile phones and the internet experienced a prolonged phase of development and mass adoption. However, Bitcoin is growing fast and increasingly essential in various contexts such as fast payments, asset trading, and foreign currency, where today’s financial system fails.
There are several reasons to expect that Bitcoin adoption might be correlated within a geographical area. First, friends might inform one another about Bitcoin or teach one another how to use it.
Second, some geographies might have higher concentrations of individuals who might value Bitcoin, either because they are technologically savvy or curious or because they have needs that Bitcoin might serve.
Third, Bitcoin is much easier to use if a well-functioning trusted Bitcoin exchange accepts wire transfers or clearinghouse transfers from local banks.
Bitcoin technology can disrupt many industries and automate various tasks that have traditionally required an enormous labor force. The computerization of many lessons brought the perspective of Bitcoin phasing out millions of jobs that were once thought to be essential to business.
Therefore, there is also the potential that the blockchain, the underlying technology of Bitcoin, actually creates jobs. Many directors find a crucial shortage of blockchain talent and hire and train new employees in this technology area.
In addition, blockchain can significantly increase the speed of transactions from days to minutes and lower individual exchange fees by removing third-party transaction requirements.
In terms of technology, Bitcoin is one of the most advanced networking systems ever created. Judging from the complexity and security of the hashing algorithm to the distributed nature of its sharing and processing, then it is genuinely innovative.
The blockchain does not require any special hardware from a hardware standpoint but instead relies on open-source and well-supported software. Moreover, Bitcoin technology will continue to legitimize, and we will see more creative ways to implement it in the technology industry.
It will require solving all technology requirements such as speed, processing time, and integration within existing systems and networks. The quality that makes blockchain technology unique is that each node does not trust any other node on the web. Typical database systems rely on a central server, controlled by some third party, to store the ‘truth.’
A new transaction (new block) is only added to the blockchain through a complex consensus process where all nodes on the network agree that this new transaction is valid. Regardless, Bitcoin has been scrutinized for the benefits and risks it puts forth regarding technical, economic, financial systems stability, and general welfare of the society.
You have looked at how Bitcoin adoption differs from other technological inventions. However, a closer look at the micro-data of individual transactions reveals that most Bitcoin users are not active. Instead, they buy and hold Bitcoins in speculation. As such, it is the leading reason for the increased adoption of Bitcoin today.
Bitcoin is currently at a precipitate in its lifespan. Its growth is inevitable, and it has proven its worth the title “king of cryptocurrencies.” Notably, Blockchain technology analysts report that Bitcoin has years of adoption ahead of them. They will undoubtedly revolutionize how world transactions are carried out, whether today or in the future.