Ten years after Bitcoin was created, doubts still linger as to whether or not it will survive in the long run and maybe become adopted by the masses as a means of transacting. Many innovations don’t last for long due to lack of practical use cases. However, with Bitcoin, we have every reason to believe that it’s here to stay. Our argument is based on five factors that have been used by tech experts over the years to gauge how well a new technology will be adopted.
The factors include compatibility with other innovations, complexity, relative advantage, observability and experience through trialability. The factors were developed by Everett Rogers, an innovation diffusion theorist. Using these factors and considering the unique features that are offered by Bitcoin our analysis suggests that the top cryptocurrency is here to stay. Below we are going to look at each factor and see how Bitcoin fulfills them.
Table of Contents
Compatibility With Other Innovations
An easily compatible technology requires the adopter to make less if any alterations in their lives so that they can comfortably use the technology. So, a compatible technology has to be consistent with past experiences and also the needs of adopters. For example, the reason why the Samsung Galaxy series is successful is because customers already have had other phones that performed the same functions as the Samsung phones. With the Galaxy series, Samsung has just incorporated all of those functions.
Now looking at Bitcoin, it seems to be a very compatible innovation as the adopter only needs to use a mobile phone that can access the internet and they can easily use Bitcoin. So the adopter doesn’t need to make any adjustments in their life to use Bitcoin.
According to the research that was conducted by Rodgers, innovations that are simpler stand a chance to be more successful than more complex innovations. It doesn’t necessarily mean that the innovation needs to have a simplistic underpinning, however it needs to be easily understood. Also, it needs to be user-friendly for the target audience.
Now looking at Bitcoin, its underlying Blockchain programming is very complex; however users who are familiar with the internet, mobile banking and graphic user interfaces, can easily understand the consumer part of Bitcoin transactions.
Bitcoin combines many technologies that make it easy for even novice users to conduct transactions. However, we cannot deny that some users could be reluctant to adopt the cryptocurrency before understanding its underlying framework.
In the field of innovation, relative advantage is defined as the improvement of a product when compared to its predecessors. The improvements can include, but are not limited to social and economic advantages in time, satisfaction, convenience, and other monetary benefits.
A good example can be offering better services, empowering users, increased productivity, saving money, providing an improved interface, reducing user effort, consolidating multiple functions in one tool, saving storage, space and time.
One of the major advantages that Bitcoin has over other payment systems is that it has a decentralized ledger. This means that no single party has control over transaction records. Also, another advantage is that a centralized ledger has weaknesses that a decentralized ledger doesn’t have.
Bitcoin also boasts low transaction fees when compared to other payment systems since they have to go through third parties that charge fees. This means merchants can enjoy low costs. Also, users can send funds across borders cheaply. Bitcoin stands to benefit the 2 billion individuals that are currently unbanked around the globe.
Also, users of Bitcoin don’t have to be worried about inflation eroding the value of the currency as it has a limited cap of 21 million coins. This can’t be said for consumers that use traditional currencies as they are prone to high inflation especially when the central banks decide to print more money to fight recessions. What is currently holding Bitcoin back is a lack of ease of use since Bitcoin transactions within payment systems are limited in many areas.
When it comes to innovation, observability means that the benefits of a given technology are apparent to the non-users of the innovation. A good example is that of the vacuum cleaner versus the broom.
Currently, there are few regions around the world where Bitcoin is in use, and this makes it hard to be observed in action. However, a country like Japan passed a law that allowed Bitcoin to operate as a means of payment and this makes it easier to be observed.
Also, Bitcoin receives a lot of coverage from the media, and this helps educate potential users of its benefits.
Experience Through Trialability
This factor considers the degree at which new innovation can be experienced firsthand even on a limited basis. Ten years since Bitcoin came around it has rapidly evolved. Currently, many virtual currency ATMs are being installed in many different locations. Such machines are designed to be, and they offer new users the chance to buy and sell small amounts of BTC and other crypto coins.
Also, many exchanges allow users to get involved with the cryptocurrency industry through small investments even using credit cards. Also, the number of people using Bitcoin to make direct purchases around the globe is on the rise.
The Digital Age
We live in an era where most people spend many hours on the internet. Availability of cheap devices like smartphones and also cheap broadband means more people can easily access the internet. Also, every aspect of our lives is getting digitalized with personal information like identity, addresses, financial statements and so forth all available online.
However, the majority of platforms that hold this information are centralized, and it’s a problem the blockchain promises to solve. Currently, many governments and institutions are considering to launch a version of their own digital money, and as we innovate more and figure out the right technology we can expect like most aspects of our lives, our money will also be digital.
Bitcoin was the first innovation that helped us digitize money and its used as a reference by anyone who is trying to create their own version of virtual money.