The question of when bitcoin will become mainstream has been a constant debate. There are models that attempt to predict how bitcoin will reach this point, including Gartner's Hype Cycle and the Technology Adoption Lifecycle, as well as opinions from many world and industry leaders.
The World Economic Forum (WEF) has a clear opinion, and has named some specific dates. The international organization was established in 1971, as a not-for-profit foundation with headquarters in Geneva, Switzerland. The WEF engages with a range of leaders and experts in several fields, including politics, business, academia. The goal is to improve the state of the world, and the the group recently released a report reflecting a range of views on future technological tipping points.
To gather data for this report, the WEF’s Global Agenda Council on the Future of Software and Society ran a Technological Tipping Points survey. A community of 816 executives and experts from the information and communications technology sector were asked for their views on 21 “tipping points,” which are defined as “moments when specific technological shifts hit mainstream society.” Answers ranging from “never” to “it has already happened” and “20+ years” were available, creating a realistic view of industry executives' perceptions of when these tipping points would occur.
The data shows that respondents feel the tipping point for the Internet of Things is in 2022, and driverless cars will take until 2026, Bitcoin and the blockchain came last on the chart, in 2027. While fewer respondents were confident about bitcoin, more of them were confident that governments would make use of the blockchain four years sooner, most likely collecting taxes via a blockchain of some sort.
Mainstream adoption of bitcoin, for this survey, is the point when 10% of Global gross Domestic Product (GDP) is “stored on blockchain technology.” 57.9% of respondents believe it will happen in 2025, with 20.4% of the respondents stating that it will never happen.
This compares to the 73.1% who believe that tax will be collected for the first time by governments via a blockchain in 2025, while only 12.3% believe that the government will never collect taxes via a blockchain.
"The blockchain creates both opportunities and challenges for countries. On the one hand, it is unregulated and not overseen by any central bank, meaning less control over monetary policy. On the other hand, it creates the ability for new taxing mechanisms to be built into the blockchain itself (e.g. a small transaction tax)."
- WEF Survey report
In a recent conference hosted by the Commonwealth Virtual Currencies Working Group, aimed at investigating the benefits and risks of virtual currencies among Commonwealth nations, the Group found that bitcoin had potential benefits, including driving development, but adoption within the Commonwealth States has been slow.
With so many of our world leaders agreeing that Bitcoin is going to be a part of our future, but will take a long time until it gets here, the question of when it will cross into the mainstream is a constant topic of conversation throughout the financial and payments space.
The Gartner’s Hype Cycle is one of the most popular, and perhaps the best frame of reference for discussing and figuring out where bitcoin currently is on its path to becoming mainstream. It’s a simple chart where the US IT research and advisory firm, Gartner, suggests the typical path that all new technologies take on their ascension to mainstream usage, and generally proves to be accurate in most technology cases.
The latest Hype Cycle places cryptocurrencies at the edge of the phase called ‘Peak of Inflated Expectations’, unchanged from the previous year.
“Early publicity produces a number of success stories — often accompanied by scores of failures. Some companies take action; many do not.”
However, bitcoin’s circumstances are more closely related to the characteristics of the next phase, called ‘Trough of Disillusionment’ which Gartner defines as the stage where “interest wanes as experiments and implementations fail to deliver.” The characteristics of this phase are very similar to those bitcoin experiences, including receiving negative press, having supplier failures, and advanced rounds of venture capital (VC) funding
Throughout most of 2014, and some of 2015, Bitcoin's ecosystem appears to have gone through all of the painful parts of the 'Trough of Disillusionment'
Bitcoin definitely has its share of negative press, the press has claimed “bitcoin has died” 74 times so far, and talking heads such as Paul Krugman still never miss an opportunity to bash bitcoin publicly.
‘Supplier Consolidation and Failures’ has certainly been breached as well. Consider the bitcoin mining industry, which has had failure after failure from companies like GAW miners, Hashfast, Butterfly Labs, to name a few. Exchanges, such as MtGox, and even some of the smaller wallet providers have also had their failures, and each time Bitcoin has become stronger as participants learn from their mistakes.
‘Second/Third Rounds of venture capital funding’ is also well on track, with several large Bitcoin companies, including Circle, Coinbase, and Bitfury all receiving their third round of VC funds. 2015 is also on track go down in history as the year the industry received its first US$1 Billion in VC funding.
Last but not least, a recent report by Acquity Group, on Next Generation Commerce, finds that 3 percent of consumers would switch retailers if they accepted bitcoin or other digital currencies. This finding supports the fact that less than 5 percent has fully adopted bitcoin.
As bitcoin’s price plummeted after its peak in 2013, other major failures followed. The fall of MtGox, the Silk Road, and several mining companies had taken its toll on the price and enthusiasm of the community.
In 2015, the volatility in bitcoin’s price has greatly stabilized and investments into the space are approaching US$1 Billion, bitcoin’s price chart appears to have ended its downward trend, swinging up towards the ‘Slope of Enlightenment.’
According to Gartner, once a technology has reached the 'Plateau of Productivity' stage, it is considered mature and mainstream adoption starts to take off.
Gartner expects cryptocurrencies to reach maturity in five to ten years, or between 2020 and 2025, which is marginally more optimistic than the WEF's respondents expectations, which predicted mass adoption happening in 2027.
However, many good arguments exist in the bitcoin community for why bitcoin is further along in the cycle than Gartner predicts for cryptocurrencies.
One well-formed argument is from Simon Dingle, BitX former product designer. This speaker, advisor, broadcaster, and AlphaCode Club thought leader presented his findings on this matter at Bitcoin Africa 2015.
The event is a world-class Bitcoin conference attended by the South African Reserve Bank, the South African Treasury Department, the Financial Intelligence Agency, banks, entrepreneurs, investors and more. Dingle made the case that Bitcoin is already in the later stages of the ‘Trough of Disillusionment.’
"Bitcoin is over here [Trough of Disillusionment], 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."
- Simon Dingle
It is easy for many in the community to see Dingle’s viewpoint, specifically because Bitcoin has barreled through the whole set of discouraging predictions on the downturn through the ‘Trough of Disillusionment.’ Still, Dingle’s chart doesn’t address the large obstacle in the way of further adoption that Bitcoin faces if he’s right: The Chasm.
The chasm in Moore’s work is a direct reference to the turning point in a Technology Adoption Lifecycle, which describes the adoption or acceptance of a new product or innovation on a Bell curve, and is often confused with the Gartner Hype Cycle.
For high-tech markets with disruptive innovations such as Bitcoin, there is a big difference in characteristics between ‘Early adopters’ and ‘Early majority’ participants, with the latter being much more conservative, risk-averse, and substantially more practical. This difference gives rise to a critical gap, called the 'chasm', which represents an adoption hurdle between the ‘Early Adopters’ phase and ‘Early Majority,’ or mainstream markets.
This theory was proposed by management expert Geoffrey A. Moore, who also wrote a book on the subject called 'Crossing the Chasm,' which sold more than 300,000 copies. According to the Satoshi Nakamoto Institute, it took from inception in 2008 until early 2013 for Bitcoin adoption to transit from ‘Innovators’ to ‘Early Adopters.’
Although the Gartner’s Hype Cycle and Moore’s Crossing the Chasm models are different, they can be used together to show a combined picture of market expectations, as well as expected technology adoption rate. The Hype Cycle was created to measure and predict expectations of new technologies, and is therefore only valid for the early stages of the Technology Adoption Lifecycle, including the chasm.
“The Hype Cycle tracks perceptions of a technology to a point within the Early Majority phase of the lifecycle, which includes the ‘chasm’ that Geoffrey Moore so eloquently details in his book.”
The idea that the Gartner’s Hype Cycle ends at the chasm is presented in more industries than just cryptocurrencies. Chris Nunes chairs the Institute of Electrical and Electronics Engineers (IEEE) working group on Augmented Reality, and in his presentation at Augmented World Expo 2015 in Santa Clara, he showed that 90 percent of the Hype Cycle is before the chasm.
Shuler and Nunes agree that these two cycles work together for any emerging technology, and it would appear to be a good explanation of Bitcoin’s current position as well.
When taken together, this body of evidence indicates that cryptocurrencies are either on their way across the chasm presently or are soon to cross, in less than the five to ten years that Gartner’s Hype Cycle suggests. Therefore, mainstream bitcoin adoption would inevitably be reached much sooner than the World Economic Forum survey predicted.