Recently I thought about how technology changes faces over time. I wrote a blog post about how the expected impact of a technology is linear and the actual impact is exponential, but that post did not relate to the sentiment, that only related to actual adoption. For the last 3.5+ years my team at Boost VC and I have been convincing people of the value of Bitcoin: family, friends, enemies… We have fielded every question you can imagine, and over the course of time, we have watched the sentiment around a technology evolve.
“First they ignore you, then they laugh at you, then they fight you, then you win.” — Ghandi
“That won’t work, who cares” — The ‘toy’ and lack of education phase.
Three years ago, when we first jumped into the Bitcoin ecosystem seriously, there was a core problem (ironically, now the core problem centers around Bitcoin Core), no one knew what Bitcoin was. It was either that they didn’t know what it was or they knew it was to buy drugs. When getting into conversations with friends, their immediate response was that it will never work and it’s a bad idea.
In this early stage, education was a huge factor in discussions with people. I found myself taking on a role as a philosopher or teacher of Bitcoin. I found myself in meetings, at conferences, in taxi’s or at the comic book stores selling a grand vision of the future, a utopian society where Bitcoin was the currency of the world. The purpose was to spread awareness and get people excited about this new technology.
I should also mention that the startup that had it the hardest was Coinbase. They were earlier than most Bitcoin related startups, and Brian Armstrong did an incredible service to the rest of the Bitcoin ecosystem by meeting with hundreds of investors and explaining Bitcoin to them. I don’t think that people give Coinbase enough credit for the road they paved for the ecosystem in getting hundreds of venture capitalists and investors up to speed.
“How do I get some?” — The popularity phase.
3 years ago, the Bitcoin price went through a lot of jumps: $20/BTC — $250/BTC, $100/BTC — $1000/BTC. During this time of rampant speculation, a lot of onlookers decided enough people were making money on it, that they couldn’t ignore it anymore. This was the time of the most education. FOMO (Fear of Missing Out) is what lead to the incredible adoption and price increase during 2013–2014.
This speculation also lead to a large influx of venture capitalists, Hedge Funds, and angel investors. I found that my philosophical pitch no longer held weight, it was too fluffy for most people, suddenly people wanted to know what this “magic money” could be used for. And so the selling point became less of a pie in the sky and more real. My selling points for Bitcoin were/are:
Cross boarder payments
- Settle transactions instantly for near no cost.
Store of value for emerging markets
- The US has a pretty good banking system with very large adoption, this is not true for many countries that have a large amount of cell phone adoption, but very low bank adoption or capital controls. These are countries where Bitcoin can flourish.
Microtransactions
- The only reason that ads are so ubiquitous in the internet world, is because that is the only way to frictionlessly pay for content. What if you were able to pay for NYT or WSJ on a per article basis, by just having 2 cents deducted per article read.
I found that explaining the technology was too complicated, and people got stuck on technical details, when they are not technical. So by focusing on the use cases, it led the people I spoke with to understand what this technology could enable.
When the price dropped, a lot of investors lost faith in the currency. However, from my perspective this was the time when the most value was created for Bitcoin: Dell, Overstock, and many other huge companies started accepting Bitcoin through Coinbase and other services. This changed the entire conversation. The public facing story changed the story from “Mt.Gox steals everyones magic money that is used to buy drugs and guns.” to, “Dell sees value in being on the cutting edge, and Bitcoin has real value”.
“Bitcoin won’t work, but the Blockchain is revolutionary.” — The ‘Rebrand’ Phase.
When the price became stable, people became less interested in the currency. Speculators like large margins. However, suddenly the Blockchain was adopting institutional interest. Every financial institution suddenly would discard Bitcoin as trivial, but would want to know everything about the Blockchain:
“I’m not interested in Bitcoin, but Blockchain is going to be revolutionary.”
During this phase the price of Bitcoin became boring, but a lot of startups built value, I feel that during this phase, our companies developed the most value for the industry. The true entrepreneurs are the ones who don’t feel the pull of popularity or the lows of abandonment when a space becomes hot or cold.
From there other institutions took Blockchain much more seriously, we have had IBM, Fidelity, IAG, BanColombia, Standard Charter… in our office just to learn more.
When big banks got involved, the sentiment around the technology shifted. We are now 4 years after I first got involved in the space, and there is still a discussion about Bitcoin, and it the concept is not doubted anymore. In fact, the institutions are debating what problems it will solve, not “Does it solve any problems.”
I think the this trend happens with all technology to be adopted, I’m sure it happened with the internet and TCP/IP, I think it will happen with Virtual Reality and Augmented Reality.
