In his 1994 book Crossing the Chasm, organizational theorist Geoffrey Moore describes and explores in detail the path a new technology must take before it goes mainstream. While the ideas he espouses largely belong to the era when Oracle, Sybase, Microsoft Word and WordPerfect were emerging technologies, the core theme is relevant to cryptocurrency adoption. If we apply the ideas today, what can we learn or predict about the coming year for decentralized technologies such as Bitcoin?
The book focuses particularly on the path of new technologies as they go from a stage of early adoption to one of early majority. As renowned technology marketer Regis McKenna clarifies in the foreword to Moore’s book, the early adopter market often comprises individuals who study and appreciate the disruptive nature of new technology. McKenna writes:
‘A mainstream market represents “the rest of us,” people who want the benefits of new technology but who do not want to “experience” it in all its gory details.’
Early adopters, on the other hand, welcome and even relish in the ‘gore’ that comes with disruptive change.
The majority of people who have used Bitcoin and other cryptocurrencies thus far have usually wanted to understand their workings. Early adopters are very interested in and enthusiastic about learning and appreciating the power of decentralized networks and their applications. They have also endured rough, unfriendly and difficult-to-manoeuvre user interfaces.
The year 2018 may mark the point when early adopters are joined by the rest of the pack. The technology overall becomes smoother and easier to use each day. We increasingly see users who aren’t interested in how the blockchain technology works getting into the space to enjoy its benefits. But it may take more time before cryptocurrencies indeed become mainstream.
According to Moore, the transition from the early adopter market to mainstream is a critical point that is normally difficult for many new technologies to surmount. The writer calls this point the ‘chasm’.
‘Every truly innovative high-tech product starts out as a fad—something with no known market value or purpose but with “great properties” that generate a lot of enthusiasm within an “in crowd.” That’s the early market. Then comes a period during which the rest of the world watches to see if anything can be made of this; that is the chasm.’
The cryptocurrency adoption chasm
To ascertain where the chasm for cryptocurrency adoption lies, we have to answer the question of how many users there are worldwide. Most marketing scholars, including Moore, agree that when a new technology reaches use by around 10% of the market, it achieves the point at which early adoption crosses into the mainstream.
It is difficult, however, to tell the exact level of cryptocurrency adoption we’ve achieved at the beginning of 2018. This is largely due to the pseudo-anonymous nature of most coins. Also, because they are largely decentralized and permissionless technologies, no reliable user onboarding statistics are available.
The problem is further complicated by the fact that users can create as many identities on cryptocurrency platforms (blockchains) as they want. A single user can create several wallets for each cryptocurrency they hold. In fact, this behaviour is not only desirable, but also recommended as a way to improve security and privacy.
Wallet use as a gauge
Most studies nevertheless choose the number of wallets available on blockchains as the best indicator of cryptocurrency adoption levels.
A study published in early 2017 by Cambridge University’s Centre for Alternative Finance indicated that about 6 million people around the world used cryptocurrencies last year. Information from Blockchain.info shows use of their wallet rose from a total of 7.5 million wallets created as of January 2017 to 22.5 million as of January 2018.
We might therefore expect cryptocurrency adoption to similarly increase by over 200%, if we assume the numbers rise at the same rate. Following that logic, we would see the number of cryptocurrency users reach about 12 million, according to the Cambridge University report. But considering that several exchanges have reported more than 10 million active registered users, the total number of cryptocurrency users could likely reach well above 12 million by the end of the year.
Still, it is difficult to imagine cryptocurrency adoption reaching a global penetration level of 10%—which would mean 500 million adult users—in 2018. White it may be possible to come close, mainstream adoption is unlikely to happen.
Without a doubt, however, cryptocurrency adoption is ‘in the chasm.’ The question is when it will scale to the other side.