Bitcoin Adoption: Is Parabolic Growth In Sight?

Bitcoin is proving to be a true hedge against inflation as more institutional investors and large corporations get in on the action, adding massive amounts of BTC to their balance sheets, portfolios, and making it available for investing or payments to their clients. Many proponents are quick to conclude bitcoin has finally arrived at mainstream adoption and while that is not really the case yet, what is true is that the adoption curve of bitcoin is increasing.

In fact, the adoption curve of bitcoin is significantly faster than other major global technology infrastructure rollouts such as landlines and the Internet. Crypto analyst Willy Woo recently pointed this out in a tweet, comparing the growing adoption rate of bitcoin to that of the internet signalling 1 billion people would own bitcoin within the next 4 years.

Adoption of new technology is increasingly faster

The speed of bitcoin adoption is faster than what we’ve seen from other technologies in the past. However, this is indicative of a larger development rather than a unique trait of crypto. The rate at which newly commercialized technologies get adopted is rising at an exponential rate across the board.

As a result from increased global connectivity and instant communication, new products and ideas spread faster than ever before. Just look at the chart below detailing the adoption rates for household appliances over a period of more than 120 years. While considered essential today, landlines, running water, automobiles, and stoves took decades to reach mainstream adoption.

For this to happen, huge amounts of infrastructure had to be built and network effects for things like landlines had to take hold to propel technologies beyond linear and into exponential growth. It takes a lot more work to convince the 10th person to get a landline connection as there are only 9 other people connected to the network, compared to the 10.000th person who instantly has access to an entire village of other telephone owners.

It takes a lot more work to convince the 10th person to get a landline connection as there are only 9 other people connected to the network, compared to the 10.000th person who instantly has access to an entire village of other telephone owners.

Modern-era inventions clearly show much faster adoption rates with computers, internet, smartphones and social media taking much less time to reach many more people. The most striking example on the table below is perhaps the tablet which went from 0% to 50% adoption in just a few years. In part, that’s because modern tech builds on existing infrastructure, but it also points to the modern consumer being better connected and less afraid to try new things.

Bitcoin, as a digital currency built upon layers of existing and fully adopted technology, is showing impressive adoption stats itself.

Comparing bitcoin and internet adoption rates

While the internet has been around much longer with an impressive adoption rate, it seems bitcoin and the underlying technology blockchain is performing even better. Early in its rise to prominence, bitcoin was growing at a faster rate than the internet was in the early 90s and it’s currently projected that in the next four years there will around 1 billion users.

Interestingly, the adoption rate of the internet seems to be following a very similar trajectory to the price of bitcoin as the chart below by Cane Island Digital Research shows.

According to Glassnode, looking at the number of new addresses joining the bitcoin network we can see huge adoption waves during the bull run in 2017. After a slight dip during the crypto winter, those numbers have since recovered and we are now looking at approximately 560K new addresses connecting to the bitcoin network every day.

What is behind the increasing bitcoin adoption rate?

While the 2017 bull run was mostly driven by retailers and speculation, the current bull run is being moved by institutional and corporate interest. Some of the most prominent companies publicly getting into bitcoin include MicroStrategy, Square, Galaxy Digital Holdings, Hut 8 Mining, Voyager Digital, Tesla, together with a growing list of successful investors and newly created financial products such as ETFs.

During the severe and long crypto winter following the bull run of 2017, many Big Finance players had ruled out ever getting into BTC citing it was nothing more than a Ponzi scheme. Now that bitcoin is well beyond recovering and fully flourishing, many early detractors have since taken a new position saying the coin certainly does have some merit as a hedge against inflation and is increasingly looking like the new age digital gold.

The founder of Galaxy Digital, Michael Novogratz, now believes that BTC is on the way to hitting $100,000 by the end of 2021 and he’s not the only one. The Stock-to-Flow model popularized by a prominent analyst called PlanB projects similar price levels, and the model’s prediction for 2020 was spot on.

Bitcoin is on the road to hitting the next price target and this in itself is driving further adoption. Corporations that are looking for ways to preserve wealth in better ways than cash balances could don’t want to join the BTC train too late, so they are piling on. That in turn leads more existing crypto traders to buy BTC, as well as introduce the concept to new people as they read news articles about more companies buying bitcoin.

Where are we in the adoption cycle?

You are reading this article. That means you at least already know the basics of bitcoin, likely with a few sats stuffed under the mattress. That also means you likely know quite a few people that know about bitcoin, and have bought some in the last few years. But don’t be fooled. Bitcoin is nowhere near mainstream adoption levels on par with tablets, smartphones or even wearables.

Looking at the specific adoption cycle of any technology, the model below explains how and at what rate new ideas and technologies spread according to communications professor Everett Rogers. The categories of adopters are innovators, early adopters, early majority, late majority, and laggards. The yellow line is the so-called S-Curve you will have probably read about whenever reading about bitcoin adoption. We are on the threshold between Early Adopters and Early Majority.

If you believe bitcoin could be the next generation digital gold, you are in the minority. Not because we have information that undeniably proves that statement wrong and only a few people believe it nonetheless. But rather because there are many, many people that still need to get into bitcoin properly, understand what it means and how they can tap into its staggering growth potential. It’s good news for early investors and the patient ones among us. Once bitcoin is the new gold, outsized gains will diminish and gold-like returns will be the norm.

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