#6 We Are Still (Really) Early

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1 Concept 💡

If you aren’t invested in crypto, it’s tempting to look at the prices of Bitcoin (over $40,000) and Ethereum (over $3,000) and come to the conclusion that you’ve missed the boat: it’s already super expensive so I must be late to the party, right? Plus it looks kinda scary and I hear there are huge price drops. Hmm, I’m not gonna be the sucker - I’ll pass, thanks!

This week’s concept is the adoption curve and why perspective is everything.

The adoption curve above represents the standard rate of adoption for new technologies. In the beginning of a technology’s lifecycle, only people like your weird neighbor who’s always fiddling with new stuff in their basement use it. As Chris Dixon wrote in his iconic piece from 2013, what the smartest people (innovators) do on the weekend is what everyone else does in ten years. As more and more people latch on, adoption slowly accelerates until that technology is universal and we can’t imagine life without it. This happened with electricity, cars, computers, mobile phones - and is now happening again with crypto.

The hard part is identifying where technology is on the adoption curve at any given time. Our immediate instinct is to use price as an indicator - but without perspective, price is relative and can play tricks on our brain. What’s expensive today might be exceedingly cheap tomorrow. For example, did you know that Amazon was $10 in 1997, went up to $110 in 1999 during the height of the dot-com boom, and crashed back down to $10 in 2001? In 1999, you might have thought that adoption had been completed (after all, how many more books were there to sell online?) and you would have been even more convinced you were right in 2001. But zooming out - you would have been really wrong about the reach of the Internet.

So if we don’t use price, how should we gu-estimate where crypto is on the adoption curve. A better proxy is users. In this amazing piece “Am I Too Late for Bitcoin?”, @CroseusBTC makes the case that BTC adoption is somewhere between ~0.1%-8.5% of users. Willy Woo below shows why Bitcoin is roughly where the Internet was in 1997. All the data suggests that we’re still early (likely early adopter phase) with the next 12 months potentially representing a transition to the early majority phase where the upside really takes off. And it makes sense: crypto has the potential to "digitally re-design" hugely valuable pieces of society's legacy infrastructure, including monetary supply, banking, contract and property rights, company formation, computing and more - which in aggregate are easily several TRILLIONS of dollars in value (this doesn't even include new opportunities it will unlock including digital art, virtual property, etc).

So the million dollar question (pun intended!) that I know you’re asking - all that sounds great, but what does that mean for price!? The honest answer is no one knows. If anyone says otherwise, they’re lying. But we can speculate based on trends (and for fun!). I tend to agree with @CroseusBTC below that most of the upside in crypto (and bitcoin) remains.

For bitcoin to achieve gold 2.0 status (as it’s often billed), it would have to hit a ~$13 trillion dollar market cap (current value of all gold in the world), which nets out to a little bit over $600K/coin, a healthy ~15X from where Bitcoin is today. And keep in mind that typically, the digital equivalent greatly exceeds the value of its physical counterpart because it can do everything cheaper, faster, better and to more users (think streaming video vs. DVD).

In fact, many experts view crypto as the ultimate exponential asset because it’s value is based on a network (which grows exponentially) — and that the proper way to look at price is on a log-based scale, not linear one. When you look at Bitcoin through the Stock-To-Flow (S2F) model on log scale, not only do you see prior crashes now appear as small blips, you see a trend line emerge that shows a large part of the value is ahead of us.

So remember, why prices may seem relatively high and fluctuate like crazy, we’re still really early in crypto’s mainstream adoption. First gradually, then suddenly.

2 Themes On Our Mind 🤔 

  1. So WTF happened yesterday with Walmart and Litecoin ($LTC)? Well good news: check out our Tiktok on what happened (and follow us!) There’s plenty of regulation still coming (and needed) in crypto -- but this is another reminder of how early we are in crypto when this kind of stuff can actually happen. Oh and to have fun with it!

  2. The one and only @Zeneca_33 shared his thoughts on the current state of the NFT market (if you don’t know what a NFT is, check out HAX Weekly #2). A couple key takeaways:

    • The comparisons he makes to how early we are in NFTs (and the different use cases which will be powered by NFTs) can be generally applied to crypto. There’s so many applications yet to be “crypto-pilled” that where are now will likely be a small blip 5 or 10 years from now on the adoption curve.

    • No one knows where we are in the market cycle. We can debate about our opinions (I personally believe NFTs will stagnate in USD value but underperform $ETH if/when ETH goes up over the next 6 months), but the meta-point remains: invest in projects you love that you believe will have staying power over years, not days or months — and HODL.

3 Things To Check Out 🔍

  1. An under-the-radar piece of news this week reports that college athlete Jaylen Clark launched his own cryptocurrency (social token) called $JROCK. First of all, amazing ticker. More importantly, this is a sneak peak of the future. Jaylen plans to provide token holders with ticket giveaways and exclusive content. As/when larger creators do this, you’ll see amazing things happen when incentives finally become aligned between creators and fans thanks to crypto - and both (as token holders) can share in the upside.

  2. Want to go deeper in NFTs, but not sure where to start? Check out Kevin Rose’s new NFT-only podcast called Proof. Kevin is super connected in the scene (he’s also the one who sold the Fidenza NFT we discussed in #4 for $2.5 million!) It’s a great way to get a peak behind the covers of what’s up and coming in the NFT scene.

  3. Had to include more crypto dog memes (the best!), this time from PleasrDAO who fractionalized the picture of the famous Shiba Inu (the dog which the $SHIBA coin is based off of) that it bought for $5.5M. Enjoy!

Until next week - always be learning,
Karthik

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