bitcoin going big

hi =)

@simondingle

A quick introduction: I host a technology radio show on 5FM, some podcasts, advise 22seven, and look after product design at BitX.

BitX runs Bitcoin exchanges in South Africa, Malaysia and Kenya. We also have offices in Singapore, Indonesia and the USA. Our Bitcoin wallet and storage services are available globally.

?It’s interesting chatting to people who’ve just found out about Bitcoin. I’m interested in the first words that jump

into their mind when thinking about it. What are the words you think of?

volatile

A word I often hear when I speak to people trying to understand Bitcoin is “volatility”. That’s because the price of Bitcoin jumps up and down in relation to other currencies. You could flip that around, however, and suggest

that currencies like the Dollar are volatile - their price against Bitcoin is all over the place =)

I believe Bitcoin’s ‘volatility’ will go away in not too long. Let’s not confuse Bitcoin’s short-term volatility with it’s long-term awesomeness.

complicated

Another word I often hear when talking about Bitcoin is ‘complicated’. That’s because Bitcoin is new and, from a technical perspective, is pretty advanced.

However, Bitcoin doesn’t need to be complicated in terms of what it can do for you. Bitcoin is money for the internet. You can buy stuff with it, send it to friends or receive it as payment. Simple.

The internet is also complicated in terms of how it works, but simple in terms of what you do with it. We need to start talking about Bitcoin the same way.

decentralised

This is my favourite word associated with Bitcoin. It doesn’t rely on a central authority. You can be your own bank with Bitcoin. This decentralised nature is its most exciting quality.

I tend to see all problems as design problems, so when I think about Bitcoin changing the world, I try to imagine its adoption as a design challenge. The technology is elegant, but the experience of using it is still clumsy for

most people. If Bitcoin is going mainstream, we have to design experiences of using it that are friendlier for non-technical users.

We need to make Bitcoin as attractive on the outside as it is internally.

Diffusion of innovations

It’s interesting to consider Bitcoin in terms of traditional product lifecycle management. Let’s think of Bitcoin as a product and look at it through the lens of two product theories, beginning with the diffusion of innovations.

This is the ‘diffusion of innovations’ graph that tracks a product throughout its adoption.

Innovators

Adoption of any new technology begins with the innovators themselves. These are the people that created it and are its de facto first users. In the case of Bitcoin, this was the pseudonymous character of Satoshi

Nakamoto and the first computer scientists that contributed to its development, including Mike Hearn and Gavin Andresen.

If Justin Bieber was a product, this would’ve been when he was first discovered by the people who write his music.

Innovators Early adopters

Next come the early-adopters. This is an exciting phase for any new product, because early adopters are awesome. They give you heaps of feedback and don’t mind putting up with the technical complexities of new products. They will actually sacrifice their own time to make things work and think of themselves as co-creators

more than mere users.

The young teens that first started listening to Justin Bieber were the early-adopters, key to his success in the mainstream.

Innovators Early adopters Early majority

If a product survives the early adopter phase, it goes on to the early majority. This is when a product can first be considered “mainstream”. The cool kids are using it and telling their friends about it. People are posting

about it on Facebook and your mother has heard about it.

For Justin Bieber, this was when he got play on big radio stations and his fan base started looking more diverse than just screaming teenagers.

Innovators Early adopters Early majority Late majority

The late majority stage is when mainstream adoption begins to hit saturation points. This is when ‘everyone’ is using the product.

Like when your mother started listening to Justin Bieber.

Innovators Early adopters Early majority Late majority Laggards

Finally come the ‘laggards’. This is where Justin Bieber is right now. Still killing it, but not opening up new market segments. And probably about to disappear.


The curve of adoption in terms of market saturation looks like this orange line. It tips past 50% as a product moves from early majority to late majority.


“The

cha

sm”

In-between early adopters and the early majority market, however, looms ‘The Chasm’. This was a term coined by author Geoffrey A. Moore who identified the chasm as the most challenging period for any innovation as it

moves between two fundamentally different markets. Many products die because they can’t “cross the chasm” and make the necessary changes to appeal to mainstream customers.


“The

cha

sm”

That’s where Bitcoin is headed in the short-term. It’s still being used and loved by early-adopters, but it must cross the chasm and become more appealing and less confusing to everyone else if it’s going to make the leap

into the mainstream.

So how will Bitcoin cross the chasm?

State of Bitcoin Q1 2015

The guys over at CoinDesk recently put out their latest report on the Bitcoin status quo. It gives us a great overview of the Bitcoin landscape and I’d like to pick out a few points in terms of discussing Bitcoin’s leap into

the mainstream.

Q1 2015: The biggest yet for Bitcoin investment

US$226m, of a projected US$676m for the year

CoinDesk - State of Bitcoin Q1 2015

Firstly, CoinDesk points out that the first quarter of 2015 was massive for investment in Bitcoin companies.

“Improved regulatory clarity … building confidence and attracting Wall Street.”


$250m

$349m

1995 Internet

$916m

$638m

$3b

2015 Bitcoin (projected)

1996 Internet

2015 Fintech (projected)

2014 Bitcoin

It’s interesting to compare investment in Bitcoin with that of the early internet. Money is pouring into the ecosystem, which will spark innovation and bring us ways of making Bitcoin work for mainstream users.

!!!!!!

!Universal!

!!!!!!!

!!!!!!

!!!!!

!!!!!

!!!!!!!

Payment Processing

Wallets

Mining

Financial Services

Exchanges

Bitcoin Startup Ecosystem: 2015


The startup ecosystem is thriving thanks to the investment mentioned in the previous slides. These are the most prominent companies that CoinDesk currently lists as shaping the Bitcoin landscape across six key areas. They

are the companies that will help carry Bitcoin across the chasm.

“Factoring in remittance fees makes Sub-Saharan Africa the most fertile market for Bitcoin … “


Africa remains of particular interest for mainstream adoption of Bitcoin, along with South-East Asia and other developing markets that tend to leapfrog the “first world” in terms of innovation.

Good design will also be key. Of course =)


The Hype Cycle

Another interesting theory is Gartner’s ‘Hype Cycle’ that looks at the visibility of new technologies and products over time…

Time

Visi

bilit

y

Technology Trigger

Peak of Inflated

Expectations

Trough of Disillusionment

Slope of Enlightenment

Plateau of Productivity

These are the different phases of the Hype Cycle, as described by Gartner. They’re pretty self-explanatory and it’s fun to think of our favourite products in terms of where they are in the cycle now. Smartphones, for example,

are on the ‘plateau of productivity’. They are well understood and make a meaningful contribution to society.

Technology Trigger

Peak of Inflated

Expectations




Bitcoin is over here, from my perspective. It has moved through the cycle relatively quickly, compared to other new technologies, and is now approaching the slope of enlightenment, although there is still a lot of

disillusionment related to perceptions in the market.

Technology Trigger

Peak of Inflated

Expectations




It’s also interesting to compare the price of Bitcoin, which hit a high of over $1200 at the end of 2013, with its position in the Hype Cycle…

?So with massive investment, smart startups working to make it more appealing, and a growing base of

mainstream users, the future looks bright for Bitcoin as it approaches the ‘slope of enlightenment’. But where is it going in the immediate future?

In a word? Everywhere. Regulation is needed for Bitcoin to really change the world of money, but we’re confident that this will come soon. Increasingly, however, people are just going ahead and using Bitcoin

because of the massive opportunities it holds. It’s the quickest and easiest way to start receiving money from online customers, for example.

Mobile will also be key to taking Bitcoin mainstream. I think of the smartphone like Pacman, chomping up all the other things in its environment. It consumed your bedside alarm-clock, your walkman, your GPS and your

notebook. It’ll soon replace your wallet too, and products like Apple Pay have helped educate the market about how awesome mobile money can be.

Bitcoin is the best kind of money we’ve ever had. It and your phone are a match made in heaven =)

thank you@simondingle

bitcoin going big

Economy & Finance