The Road to Bitcoin Adoption Isn’t Paved Very Well
Why Governments and People Hate Innovation, I mean Bitcoin.
Blockchain, like most innovative technologies, has been met with a significant amount of resistance. The vast majority still hear the term and think, “criminal activity”, “drugs”, “scam”, or “hackers”.
It’s human nature to confront change with disbelief and ridicule. The media and internet culture have blown up the perception of blockchain, bitcoin, and cryptocurrencies to be get-rich-quick schemes, or something dreamt up in an Occupy Wall Street meet-up.
Blockchain is far less exciting and far more utilitarian than many are aware. Blockchain is a technology that can be implemented into existing processes to make them more efficient: by cutting out middlemen and incentivizing each party involved to be a “good actor”, meaning, someone who is performing their role as expected within an ecosystem. As a society, we constantly challenge innovation and make fun of those who pressure the status quo.
The Wright brothers were considered failures, until they weren’t, laughing stocks until they succeeded beyond the limitations of disbelief. Can you imagine how ridiculous it would have sounded if, before the advent of the plane, you met two brothers who were building “flying machines” in their garage?
If the modern-day version of the Wright Brothers are in a Silicon Valley garage right now working on the next innovation in travel, they’re probably not getting much support.
Not too long ago, people thought the internet was a fad: it was competing against institutions as old as America. They had been around for so long no one saw any reason to alter the processes.
We see the same teasing when blockchain is mentioned, yet, while mainstream media continues to belittle the technology, large financial institutions and investors like BlackRock and Peter Thiel have already begun to move their capital into the market. While retail investors are skeptical and outspokenly weary of the space, their financial advisors are positioning themselves to begin investing. Goldman Sachs recently issued an analysis on Bitcoin with short term targets well above its current price point, showing an increased openness to the asset.
Regardless, even with accredited investors and banks beginning to change their opinion of digital assets, there are still countless roadblocks on the horizon.
Countless roadblocks that need to be overcome for the real use cases of blockchain to have a chance at creating a genuine impact.
Humans Hate Innovation
We Don’t Like Stuff Until Other People Think It’s Cool
Imagine what internet pioneers heard when they first began to evangelize. What purpose did the internet have? Before you could pay your bills, check your bank balances, and communicate with people across the world — what utility did the internet represent that made it such a staple in modern life? We often look back on new technologies and see their path to mass adoption as quick and painless, but everyone looks positively at a marathon when their point of view is from the finish line.
In reality, the internet had a hell of a time gaining widespread adoption. Much like the crypto-asset market. The internet was quick to build momentum but slow to develop use cases that would bring a large user base.
Think of the many use cases the internet now presents:
- watch television
- listen to music
- take classes, pay bills
- buy tickets to virtually anything
For all of these use cases to exist, companies and organizations had to adopt a new infrastructure. Bankers probably laughed when they first heard technologists preaching of how the internet could be used to transfer funds.
How could that be secure?
Why would anyone trust the internet with their money?
Some Nigerian prince keeps sending me this electronic mail, I think he’s a scammer, the internet is for scammers!
Yet, despite the ridicule and downright disbelief that the internet was faced with, it has become the norm to pay bills and even deposit checks virtually. We rely on the internet for nearly everything. The internet has become the new infrastructure that innovations are now built upon. It has helped facilitate technological advancement in countless industries, and permits open-sourced collaboration on a global scale: meaning millions of people from around the world can all work together to solve complex issues.
If you’ve followed the news and public perception of cryptocurrencies, these stories might seem familiar. Bitcoin has been sensationalized by the media: the general populations' perception of blockchain is mostly incorrect, they see it as synonymous with Bitcoin. When in reality blockchain is the foundation beneath the popular digital currency.
Blockchain is to Bitcoin what electricity was to the lightbulb. It’s the technology that makes it possible, but the utility of blockchain extends far beyond the transfer of value, much like the utility of electricity extends far beyond powering a light bulb.
When electricity was invented, there was no suitable infrastructure for it to be implemented throughout. Houses weren’t built to be fit with electrical wiring, power was only generated from select locations, and it was overall, inconvenient to use. The infrastructure in place was not suited for the new technology, which is the very nature of innovative technology. If something is challenging the status quo, why would the status quo have built a system for it to fit perfectly within? At the time of its advent, it was seen as a fad reserved for the rich, the dreamers, and the lunatics.
It was hard to believe the internet would have as much use as it does today, because institution we now interact with primarily through the internet, hadn’t set up systems to take advantage of the technology. It wasn’t perceived as secure, so utility companies didn’t use it to transmit bills, which often contain sensitive information about the person billed. There are new technologies today that have the potential to solve serious issues the world is faced with, yet we hesitate to adopt them. Electric cars can help save us from the damage that the industrial revolution spurred against our environment. Vertical farming can quite literally solve world hunger — but these have yet to become norms because change is hard.
It’s hard to set up a new system for a technology you’re unfamiliar with.
It’s hard to revamp your entire farm to fit a method that is obviously more efficient.
It’s hard to accept that a system you may not think is broken, has a better alternative.
Why Humans Hate Innovation
Innovative technology has to successfully fit within the infrastructure made for its predecessor, once it fits, it has to flourish — to beat out its predecessors on its own turf. Only then will the general population begin to adopt it, and large organizations start to create solutions that fit within the new paradigm.
The problem with this is that the infrastructure new technologies often have to flourish in, are often controlled by stakeholders who have a lot to lose if the new technology takes off. Let’s think back to the electric car example: the resistance that electric cars are experiencing isn’t coming from car manufacturers, they have already started to pivot their facilities to produce electric vehicles, the resistance is coming from oil and gas companies. There is far too much capital invested in the infrastructure required to produce oil and gas for these companies to go down without a fight.
Maersk Drilling, an oil rig operating company based out of Denmark, has already started developing new oil rigs expected to cost $4–6 billion USD just this year. What incentive do these companies have to stop? They’re generating consistent and highly favorable profits with the current system, if it isn’t broke don’t fix it, as they say.
Ever wonder why electric car manufacturers always boast about how far they can travel on a single charge? Because much like there were a scarce offering of power generators when electricity was invented, there aren’t many charging stations for electric vehicles. In order for them to become adopted at mass, they need to first flourish in the current system, despite the infrastructural resistance they face.
It’s easy to paint oil and gas companies as the enemy here, but think about your home or family as an organization for a moment.
Why haven’t you installed solar panels to power your home?
You’d be helping the environment, and you can potentially generate enough power to actually earn money every month from your electric company. You haven’t invested a fraction of what oil and gas companies have into the infrastructure to distribute gasoline, yet you’re still hesitant to adopt an innovation that will benefit your finances in the long run, and the planet. Change is hard, changing infrastructure is hard, and expensive.
The Future of Blockchain
In order for blockchain to achieve the same level of adoption that the internet or electricity have, it’s going to need to come up against the oldest and largest infrastructure in the world: financial infrastructure. Facebook recently caused a stir in the U.S. government when they announced their plans to launch Libra, their own digital currency. The U.S. government doesn’t want Facebook to control a currency, they openly stated that they see it as a threat to the dollar, aka the current infrastructure. What the lightbulb was to electricity and what bitcoin is to blockchain, is what the U.S. dollar is to credit and debt (our financial infrastructure). If you remove the U.S. dollar, that infrastructure loses its largest use case.
It becomes less powerful.
One of the unique selling propositions of blockchain and bitcoin is that it gives individuals the ability to be their own bank — why would banks ever want to allow this vision to come to fruition? Bitcoin, the first cryptocurrency, is a threat to countless financial organizations, from banks to money remittances — even loans can be facilitated over the blockchain.
It’s easy for banks and even governments to point at blockchain and say it isn’t working: it’s too volatile to be used as an everyday currency, transaction fees can get too high to make it a feasible solution for microtransactions, and when the network gets congested transfer times slow down. That’s because blockchain is still in the phase of adoption where its’ only for the rich, the dreamers, and the lunatics — it’s still fighting to succeed in an infrastructure that’s built for its predecessor. What’s truly amazing about blockchain, is that due to the increased connectivity people experience via the internet — the increased access to information and other people — blockchain has managed to build up its own infrastructure relatively quickly. Since Bitcoins inception in January 2009, the market capitalization of Bitcoin has grown with its user base, peaking at around 814 billion USD.
There are typically four phases of adoption when society is faced with innovative technology:
4 Steps of Adoption
With blockchain, we’re currently at “Resistance”. It’s been around long enough for most to not dismiss it as a fad or fraud. Just long enough, in fact, that institutions and the infrastructure they’ve built are beginning to resist against the change. When it gets so large or widely used that it can no longer be suppressed, companies and large organizations will start to facilitate it, acting as if they have been supporters all along. Finally, it will become so mainstream that the original evangelists will lose interest, and user-friendly solutions will allow everyone, regardless of how tech-savvy they are, to take part in the blockchain revolution.
— — — — — — —
This article was inspired by and draws heavily from a keynote speech by Andreas Antonopoulos. He’s an incredibly intelligent human and bitcoin advocate, I strongly suggest reading everything he’s written if you plan on taking the dive into blockchain, cryptocurrency, and the future of money.