Where is Crypto on the Product Adoption Curve?
Charting Bitcoin and DeFi's Positions on the Adoption Curve
Have you ever wondered how new technologies become popular? There's a pattern that many innovations follow, called the product adoption curve, which helps us understand how different groups of people start using a new product over time. Below, I outline where Bitcoin and DeFi fit on this curve and explore how Bitcoin is moving beyond the early stages of adoption.
Bitcoin's Current Stage - We’re Still Early
With the creation of Bitcoin Spot ETFs, most people would agree that Bitcoin is no longer in the very early “innovators” stage of adoption. Wall Street has embraced Bitcoin as a real financial asset, and major financial institutions like BlackRock and Fidelity are marketing it as digital gold. Bitcoin is clearly in the “Early Adopters” stage.
The Rise of DeFi
While Bitcoin is being adopted more broadly, DeFi and the rest of the crypto-verse are still innovating behind the scenes. Although it may not feel like that on Crypto Twitter, it’s true. Most DeFi companies are only a few years old, and I know firsthand that many people in traditional finance (TradFi) have never heard of Decentralized Finance. Additionally, many people in the Bitcoin community (BTC Maxis) have yet to discover DeFi. This is mostly due to their laser-eyed focus on Bitcoin, and BTC’s inability to execute complex transactions on-chain. This will change with some of the latest updates to the Bitcoin protocol. BTCFi is already gaining buzz.
More on the Product Adoption Curve
The product adoption curve is a model that shows how different types of consumers adopt a new product over time. It usually includes these groups:
Innovators - These are the first few who try out the new product. They're willing to take risks.
Early Adopters - This group is quick to try new ideas after the innovators have shown that they work.
Early Majority - These people are more cautious but still adopt the product faster than the average person.
Late Majority - They're skeptical and will only use the product after seeing many others use it.
Laggards - This group is the last to try new things, often resistant to change.
Understanding the Adoption Gap
In theory, an "adoption gap" usually appears between "Early Adopters" and the "Early Majority." After a product has been proven by innovators and early adopters, there is often a pause or a slow period before it starts to catch on with the broader, more cautious audiences of the early and late majorities. This is where we are with Bitcoin. In my opinion, the largest hurdle crypto faces is Bitcoin traversing this gap. Once we’re on the other side, crypto will be accepted as a true asset class, and the space will be able to unlock all the benefits that come with majority adoption.
Conclusion
Here we’ve explored where Bitcoin and DeFi are on the product adoption curve. Bitcoin is advancing past the early adopters stage, getting ready to bridge the gap to the early majority. DeFi is still in its early days, catching the interest of innovators and very early adopters. The challenge ahead for Bitcoin is to cross the adoption gap successfully. Once it does, it could pave the way for cryptocurrencies to be widely accepted as a legitimate asset class. This would unlock numerous benefits, such as more investment and more innovation in this space, which could affect everyone's financial transactions in the future.