Bitcoin today is Apple in 2008
Bitcoin hangs near the chasm of the adoption curve and its price looks similar to Apple’s stock in 2008 before it broke out with a 520% rally.
Description: Is it even fair to compare Bitcoin to younger versions of tech giants like Apple? Let’s try to figure it out.
Bitcoin is at a critical adoption point, like Apple’s shares in 2008 on the eve of the bullish rally, which led to a 520% price increase. This is the conclusion of analyst Marcel Pechman. In 1962, sociologist Everett Rogers published the book “Diffusion of Innovation”, in which he divided consumers into the following five groups: innovators, early buyers, early majority, late majority and underperformers.
The most important area of the implementation timeline is the critical gap (“chasm”) between early buyers and the early majority of consumers. Overcoming this gap represents a transition to the mainstream market and has much in common with the current state of the crypto market.
Geoffrey A. Moore’s book “Crossing the Chasm” says that in order not to fall into the gap, a product must offer a complete solution and provide a high level of service that will attract pragmatists and create a lasting reputation through word of mouth.
Smartphones are an excellent example of how to successfully overcome this kind of a chasm. Apple released the iPhone in June 2007 and sold over 300 000 units on the first weekend. The following year the iPhone 3G appeared and set a record of 1 million units sold during the debut weekend. In such a scenario, one could expect a steady growth in Apple shares (AAPL), but this did not happen.
There was a 63% growth in the second half of 2007, but even in this period there was a 22% drop in just five days. The beginning of 2008 was a difficult time for shareholders as the AAPL price fell from $28 to $18 in less than a month.
In 2008, the share of smartphones in the U.S. mobile phone market hardly reached 10%. Consumers were undoubtedly at the stage of “early buyers”, so investors had reason to doubt their optimistic expectations, even if they came from reputable investment firms.
Currently 11% of Americans own Bitcoin, which corresponds to the level of smartphone adoption in the mobile phone market in December 2008. Similar trends can be found in price volatility and correlation between Bitcoin and the S&P 500 index.
While Bitcoin can be considered an innovative technology with undeniable advantages over traditional financial instruments and gold itself, it has yet to prove that it can achieve a capitalization of $1 trillion. Changing people’s habitual behaviour and, more importantly, their beliefs is a truly titanic task.
The notion of money is associated in society with fiat systems that depend on intermediaries. Bitcoin must undergo a certain metamorphosis to win the early majority of pragmatic consumers.
The launch of iPhone 4 in June 2010 proved to be a spark that ignited these pragmatists. What played a part? A 5-megapixel camera with 720p resolution? Maybe it was the launch of FaceTime? Could it have been an app store that reached 5 billion downloads or a two-year $99 contract for the old 3GS model?
It is quite possible that the combination of all these new product features allowed Apple to overcome the critical point of implementation. Apple investors who left the market in 2008 due to share’ price volatility, a 20% drop in value and the uncertainty of mainstream implementation are likely to have repented strongly of their decision. Over the next three years, AAPL shares soared 520% to $78 in early 2012.
A similar scenario for Bitcoin would lead to its price of $60 000 in 2023, corresponding to $1.1 trillion of market capitalization. Of course, many would not believe these figures. However, Bitcoin’s estimate of a trillion dollars is only 10% of the total market capitalization of gold, equal to $11 trillion. This is only 3% of the current global supply of banknotes, coins and check deposits.
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