Could 2021 be the year that crypto goes mainstream? Well, I suppose that depends on what your definition of "mainstream" is, but I do think that the first part of 2021 has shown some fantastic progress for crypto. In this article, I want to highlight some of the recent crypto developments as well as analyzing the adoption of cryptocurrencies using the "Technology Adoption Model" that is common in marketing research.
Bitcoin and ETH All Time Highs
When it comes to the adoption of crypto, the first thing we have to talk about is price. Bitcoin and ETH have been hitting lots of all time highs lately which is good for adoption in at least two ways. First, any kind of "All Time High" announcement creates buzz and interest. ATHs put crypto in the news which is basically free advertising. If it doesn't necessarily increase adoption, the news of a new ATH persuades people to at least consider crypto if for no other reason than the potential of making a profit.
When I first started in crypto several years ago, hardly anyone ever asked me about it. Over the past few months, I have had several people coming up to me and asking about DOGE, BTC, etc. I know this is anecdotal evidence, but I live in a REALLY small town where I can't even pay my rent with a credit card yet, so to hear multiple people coming up to me and asking about crypto shows that crypto awareness is certainly increasing.
Second, basic economics tells us that an increase in price (given a fixed supply) indicates an increase in demand for something. Since the prices of cryptos are going up, that can only mean that the demand is increasing as well. Perhaps this increased demand is from new users entering the ecosystem, or perhaps it is from established players doubling down on existing positions, but its still an increase in demand.
Its always big news when Elon Musk announces that the company is holding 1.5 billion in BTC or that customers will be able to pay for a Tesla with BTC, but it is also a bit expected for a company that focuses on marketing it self as a high-tech, way of the future company.
However, its even more impressive when a company like VISA announces that it will allow settlements in crypto. In contrast to existing crypto payment methods which require the crypto to be sold for fiat and then converted to dollars, Visa's new partnership with Crypto.com will allow credit card transactions to be directly settled in USDC with zero need for conversion. In other words, the underlying crypto will be treated the same as cash.
Technology Adoption Model
In marketing courses, the Technology Adoption Model is used to conceptualize the rate at which different groups of customers adopt a new technology, and I think it has telling implications for crypto adoption. According to the model, the earliest group to adopt a new technology are the "Innovators". The innovators are usually very young, willing to take risks, and adopt a technology that very well may fail. In general, the first 2.5% of the population that adopts a technology are called innovators.
Although we may like to think of ourselves as innovators by investing in crypto, its estimated that around 10% of the US population already owns some form of crypto. This means that the chance to be an "innovator" has already passed and that we are now "Early Adopters", but why am I making such a big deal about the choice of words?
The reason that the Technology Adoption Model is so important is because it shows that cryptos still have a high potential for future growth, BUT it also shows that the window for becoming an early adopter is quickly closing. As we are already at 10% crypto adoption, we are nearing the end of the Early Adopter phase of crypto and will soon be entering a phase where crypto becomes mainstream.
On one hand, crypto becoming more mainstream is good. It allows the Early Adopters to profit (hopefully) from the positions and projects that they "got in early" on. On the flip side, as there becomes more interest in the technology, more investors compete to find the new, hot projects which means it can be harder to find those "moonshots." Obviously, as the tech matures, more regulation can be expected as well.
I actually started this article with the intention of mainly talking about the recent ATH of ETH, but once I saw that the ATH was due to the partnership between Visa and Crypto.com, I knew that I had to talk about that huge development instead. As so many others have said, we have been on the transition to a digital world for several decades, but the virus has accelerated this transition.
I see this not just with online shopping and virtual work, but also the transition to a new, digital monetary system. The first part of 2021 has already been a huge year for crypto, and I think that we will see quite a few more major developments before the end of the year.
Some of the cryptocurrency platforms that I find helpful are listed below. When you join with one of my links, there is no cost or penalty to you, but it does help support my work.
Publish0x – Cryptocurrency blogging site
LBRY – Decentralized video hosting
Splinterlands – Online Trading Card Game
Coinbase – For those times when I need to use a centralized exchange.