Fear of electricity 1889

Understanding the development of Bitcoin as a technology with a look into the past

“Every progress in technology and the transformation of infrastructure that it brought about resulted in disruption at the beginning.” — Der Chauffeur, 1906

The fear of new technologies is probably as old as mankind itself. But history will show you that new and better technologies prevail. Bitcoin is new and better than the old financial system. Bitcoin has been around since 2009. But it’s only been a few years that it’s really hit the mainstream. Many people are trying to give Bitcoin meaning, but is it really necessary?
Bitcoin is digital gold, Bitcoin is store of value, Bitcoin is money, Bitcoin is software or Bitcoin is rat poison.

Fear of Radio, source: https://twitter.com/DocumentingBTC/status/1423653924532273154

Network effects in Bitcoin

“A new study estimates that about 46 million Americans now own at least a share of Bitcoin — or about 17% of the adult population. What’s more, a high percentage of those people are open to adding cryptocurrency to their personal financial plans. New York Digital Investment Group conducted the study, and they found that about 75% of the respondents said they wanted to learn more about Bitcoin annuities and Bitcoin life insurance. Nearly 90% said they had some interest in insurance or annuity products that have at least some indirect link to Bitcoin.” — Nasdaq

So that’s about a 20% penetration rate over 12 years in the USA for knowing/owning Bitcoin (Not money adoption). So Bitcoin is growing in America about as fast as the Internet and cell phones.

Adoption rate, source: https://marketrealist.com/2015/12/adoption-rates-dizzying-heights/

Bitcoin is the fastest growing technology and at the same time the fastest growing asset in the world. Bitcoin is growing faster than the Internet and it took Bitcoin only 12 years to reach a market capitalization of $1 trillion (Google and Amazon took about twice as long). Bitcoin is growing faster than the Internet worldwide.

“In only 12 years, Levin estimates that BTC reached 135 million users today with projections to have 1 billion users by 2025. In the chart below, it’s possible to distinguish that when the Internet was at the same point in its adoption curve, it took 7.5 years to reach 1 billion users. BTC will do the same in almost half the time.“ — Reynaldo Marquez

Adoption Rate for US, source: https://marketrealist.com/2015/12/adoption-rates-dizzying-heights/
source: https://twitter.com/MustStopMurad/status/1022169639386836992 (“we are here” is from 2018 ;))

The usability and utility of Bitcoin increases as the number of users increases. The higher the usability, the more users are attracted. The increased usability leads to a monopoly position. Bitcoin is the first mover and at the same time has unique technology properties. Even if there was a better technology (which there isn’t), Bitcoin would have a huge (uncatchable?) lead. Bitcoin is already a major global brand (credits to: https://twitter.com/Justdoitalex).

Network effect in the Bitcoin network, source Alex von Frankenberg

Let’s take a look at how old technologies have developed in retrospect. You’ll find that no new technology came without initial concerns and criticism. As Mahatma Gandhi said, “First they ignore you, then they laugh at you, then they fight you, and then you win.”

1) The car

“I believe in the horse. The automobile is a temporary appearance” — Wilhelm II, Emperor of Germany, 1916

Cars were called “ wagons without horses “ or “ fire wagons “ at that time. In the beginning, cars were considered a hobby for the rich. Only the wealthy could afford a car at the beginning of the technology. It was only through mass production that the price came down and the usage of the car by the general population increased. Another problem was the previous infrastructure. All roads were designed for horse hooves. For horses, a rather loose surface is optimal. For cars, of course, solid roads are better. Some roads were not passable for a long time. As the automobile spread through society, the infrastructure gradually improved as well. So first there was the technology. Then the necessary infrastructure was built.

The first car drivers were in the minority and had to face the first skeptics. As the number of cars increased, the danger, noise and dust pollution also increased. As the majority of the population did not have a car they criticized the increasing motorization. Fear of progress and lack of education were probably causes for the negative reaction of the population. Gradually, however, the car companies began to advertise more and more to convince the population of the advantages:

“There is a great attraction in being able to take the wheel yourself, to set the pace as if on the journey to happiness. Tightly cloaked, immune to dust and water, the passionate motorist races toward her destination.” — Jutta Czabaun (translated from german)

Criticism from the public expressed itself in insults or even stone throwing. Early car drivers had to be patient and very convinced of the new technology. Initially a status symbol, the automobile evolved into a better transportation method. The car made the driver independent of timetables and, by owning his own individual means of transport, distinguished him from the masses.

It was not until the growing use of cars that the road (infrastructure) was changed. Roadbeds were replaced, new roads or parking lots were built. The infrastructure of a city was gradually adapted to the car, which established itself as a new and better means of transportation. As long as the new engine has not displaced the horse, the road must also suit both “technologies”. Concrete, such as that used in highway construction from 1923 onward, was considered inappropriate for horses’ hooves. Thus, country roads with cobblestone surfaces were created. Over time roads were fully optimized for cars.

„At first, the infrastructure is built for the technology you are replacing. Then something really interesting happens. When you pave roads and make them suitable for vehicles, the old technology (horses) are still comfortable on the new roads. […] You start with a new technology living on the old infrastructure, then it flips and you built new infrastructure.” — Andreas M. Antonopoulos

2) The railway

“The railroad was invented in the 19th century and was also laughed at in the beginning. Within a few decades in the 19th century, the railroad developed into an interconnected transportation system that drastically shortened travel times in Europe and North America. It acted as a catalyst for the industrial revolution, on the one hand creating the infrastructural conditions for the development of heavy industry and, on the other, itself generating a huge demand for iron, steel and machinery. Modern bridge building and tunneling emerged to provide rail roads.” — wikipedia

Again, there was the technology first. The technology was then used to build the necessary infrastructure. Criticism of the railroad was formulated at the beginning as follows:

“Doctors warned of illnesses, such as pneumonia, caused by the airflow at this outrageous speed. The citizens were warned not to ride the railroad, because at that speed they could become unconscious or insane from the landscape rushing by. Besides, the smoke would poison people and animals.” — Traunsteiner magazine

Creative and technological disruption plays an important role in the evolution of society. The Bitcoin network as a digital payment system is a complete wave in itself. You can build almost any financial technology as a sidechain or second layer on top of Bitcoin. Maybe Bitcoin is this sixth wave?

source: https://www.visualcapitalist.com/the-history-of-innovation-cycles/

Electricity, airplanes, ships, drones, the Internet or Bitcoin all important technologies have two things in common:

1) There are criticisms of the technology that, upon closer examination, turn out to be false.
2) First there is the technology and then there is the necessary infrastructure. There are no gas stations, there is no power grid, there are not enough computers, there are no roads, there are no telephones, …

Even with Bitcoin, first there was the technology. Now the infrastructure for it is being finalized. There are different apps, technical advancements, and companies as well as banks that are now using Bitcoin for themselves. It is also becoming easier and easier for the consumer to buy and store Bitcoin. What took a lot of effort in the beginning is nowadays possible with a few clicks. Bitcoin first had to compete with the previous banking structure of credit cards and SWIFT.

“What we are part of now are the first stages of the future of money, the greatest infrastructure inversion the world has ever seen.” — Andreas M. Antonopoulos

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