Anyone who was around cryptocurrency the last few years realizes it is a wild ride. We see a major bull market followed by an even worse bear market. This is a situation that caused many people to be turned off by it. The naysayers were able to leverage up their attacks, spreading FUD that has beaten down an industry.
Or did it? While many are still standing, what took place the last couple years?
My view is that most people are looking at cryptocurrency in the wrong way. They make the mistake of thinking that since this has a financial component, that is what it is. What happens with this viewpoint is the completely miss the fact this is a technology. Hence, we are dealing with a technological, rather than, a financial innovation.
So what really happened the last couple of years?
If we remove the financial viewpoint from the equation, we quickly realize there is no bull or bear. Those are financial terms.
Instead, what took place is very common with technology. It is not uncommon for things to get ahead of themselves. The reason for this is expectations can move ahead more rapidly than development.
Gartner put together a famous chart showing how the trend operates.
The Trough of Disillusionment is where we presently stand now. It is the point where the hype bubble was popped and people gave up. The early promises did not meet expectations which soured people. In other words, they think the technology was a failure.
What actually happened was the first version of the technology did not meet expectations. Continued development producing updates changes the scenario. Over time, version 2.0, then 3.0, etc.. show up which are better experiences than the previous generations.
Cryptocurrency is working on the technological components as I write these words. People are working on scaling solutions, better interfaces, and more interactive offerings. In short, the industry is still in need of a massive buildout.
This was basically the sentiment of Brain Armstrong, CEO of Coinbase. There was a Cointelegraph article that outlines how the industry is going to jump from 50 million users to 5 billion. The short version is through development.
Basically, he compared cryptocurrency to the early days of the Internet. There were a lot of challenges in the early years, even after the World Wide Web was introduced. It took a couple of years before the web browser came into being. It was really Netscape that was the true game changer enabling for the move towards mass adoption.
The difference between the development of the Internet and cryptocurrency is we did not have the Internet to watch the development of the Internet. It took decades for it to go from idea to mass adoption. Considering the foundation for the Internet was laid in the 1960s. That means we are looking at over 35 years before this technology became mainstream.
Going back to the Gartner chart, the next stage is the Slope of Enlightenment. Notice, even though this is not to scale, the trajectory is much flatter than the initial run up. This is logical since development takes a lot more time than inflating expectations.
This is better reflected in another chart, one that follows the number of wallets.
Notice this consistency of the growth. This is a far different viewpoint as compared to a price chart of say Bitcoin. In short, it states that the technology is expanding in its uses. More people are getting involved over the course of time. This makes sense since more users tend to coincide when more applications are being offered.
Notice the number of users from the early days of the Internet and how it changed over the last few decades.
If we believe we are somewhere around the mid 1990s in our correlation between cryptocurrency and the Internet, then we can see that it is likely that the massive explosion is ahead of is. Once again, this follows the technological trends so many industries experienced. It is nothing different.
At some point, the Slope of Enlightenment steepens as the pace of adoption expands.
This is exactly what we will see with cryptocurrency.
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