This is continuation of diffusion of innovation which you do not need to read to understand this because I will repeat myself here.
Adoption curves are also called S-curves, which are the pattern of adoption that new technologies follow as they become more widespread among a population. The name comes from the shape of the curve, which resembles the letter “S”.
At first, adoption is slow and flat, but as it reaches a critical mass crossover (until when it is not clear who will be winner), it accelerates rapidly and captures a large segment of the population, resulting in a vertical shoot upwards on the chart. Eventually, it levels off and flattens out again to form the “S” shape, as the technology saturates the market and there’s no more room for growth.
To better understand S-curves and how they apply to adoption, I’ll show you a chart that visualizes the different segments of the population that can be broken down when measuring adoption. These segments include innovators, early adopters, early majority, late majority, and laggards.
This is how looks like S cure on top of these population segments:
Innovators are the first to adopt new products and services, often before they’re fully developed for the mass market. They represent approximately 3% of the overall population and are typically tech enthusiasts, early investors, or otherwise tech-savvy individuals.
Early adopters are the next group to adopt new technologies. They represent about 10% of the target population and are interested in products that solve specific problems in their lives, even if they don’t yet apply to the broader population. When enough early adopters join in, the critical mass crossover is reached, leading to a snowball effect of further adoption that spills over to the early majority.
By the way, I also recommend checking out the blog post I made about network effects, as it helps illustrate why this happens.
Between early adopters and early majority is chasm, which is a graveyard for many innovations that lookes like they will succeed, but they don’t. This is where the mass crossover point is, and if innovation, or in this case cryptocurrency succeeds to reach it first, it starts explosive growth – the middle of the S curve.
The next group is the early majority. These individuals are willing to embrace new technology but only when it’s working smoothly. They prefer slick interfaces, and it’s important to them that others are also using the technology. They are not the first ones to adopt new technology, but they will join in once they see their trusted friends and family using it. This group makes up a significant portion of the population, approximately 40%.
Following the early majority, we have the late majority. They are similar to the early majority but less willing to try new technology. As the name suggests, they are slow to adopt and quite risk-averse. They prefer everything to be working perfectly before they get on board. They are beginning to use new technology because everyone cool is using it already. This group comprises another 30 to 40% of the population.
Finally, we have the laggards, who are typically not interested in technology and are resistant to change. They are satisfied with what they have and only adopt new technology because of social pressure. This group represents the last approximate 10% of the population, and they are often stereotyped as older individuals who are reluctant to use smartphones or other new technology. It is usually like a punishment for them to learn to use this another new thing.
Now, let me show you a chart that visualizes the S-curve adoption pattern that we’ve seen with many forms of technology in the past. This pattern is particularly interesting when it comes to cryptocurrencies. Keep on mind that the rate of adoption has increased over the past few decades, with more recent developments catching on much quicker than technology from earlier in the 20th century. The last innovation is ChatGPT from OpenAI, in few months almost everyone at least heard about it.
The adoption of technology follows as I said earlier an S-curve. It starts with a flat period, then spikes and eventually levels off. However, with the latest tech developments, you’ll see that the flat periods are almost non-existent, and it’s a near-vertical line upwards, which is quite intriguing.
With this understanding of the S-curve and how technology is typically adopted, let’s apply it to crypto. Bitcoin, crypto, and blockchain are all forms of technology, so we can expect a similar S-curve of adoption to take place. If you are asking if you are too late, now you know that real party hasn’t even started yet.
What makes crypto special is that it might be the first-ever investable S-curve of adoption of a brand-new technology. In the past, you could only invest in companies on the periphery around the new technology, but with crypto, you can invest in the technology itself. This means that if you believe that cryptocurrencies will be another game-changing technology that will affect practically everyone in the world, and that everyone will eventually adopt over a period decade or two, then you can invest in them directly.
As more people adopt Bitcoin, the limited supply means that the price will inevitably increase due to the higher demand. This is particularly true if we are still early in the overall adoption curve. As of 2023, estimates suggest that we are only around 2-3% of global internet users, placing us in the innovator stage of adoption. Despite this, individual cryptocurrencies have reached valuations in the hundreds of billions of dollars in market cap. This is one danger with such markets because there are lot more people who want to just buy and bet on coins instead of using them. And when someone is not innovator or early adopter, but is trying to rush into it without understanding what it is about just to make quick buck, problems emerge. People like that are easily convinced by loud actors who more often than not, don’t have good intentions.
If adoption continues at a steady pace, prices could increase dramatically regardless, particularly as we move to early and late majority stages of adoption. This could lead to returns that are difficult to comprehend at this point in time, making cryptocurrencies potentially lucrative investments. However, it’s important to note that all of this depends on continued adoption. If adoption falters, then you will just end up being bag holder. You see, the thing with cryptocurrencies is that it is zero or hero, or it will become something gigantic, or it will o to zero, or $0,00000789 😊
Looking at past examples, we can see that the rate of adoption of new technologies is happening much sooner than before. This suggests that we may reach a large segment of the population in a relatively short period of time, leading to even more dramatic price increases. Therefore, it’s crucial to keep a close eye on real adoption to ensure that it’s continually increasing. The potential for significant returns from cryptocurrencies is enormous, but it all hinges on adoption. Adoption, which is other name for usage, is the only thing that matters at the end of the day.