Cryptocurrency

How to understand the adoption of Bitcoin beyond the amount of users

Key facts:

Many have attempted to calculate the exact amount of users of Bitcoin, but this is unlikely.Bitcoin is an innovation radically different from other technologies.In enlargement to the abundant statistical data about Bitcoin, it has sought to calculate the amount of active users of this protocol on many occasions. However, most of these exercises have multiple inaccuracies, due to the immense amount of variables that must be taken into account.For example, consider a posting made on Reddit recently, where the author proposes a way of calculating the amount of active users of this technology. The approach part of to interpret the curve of Diffusion of Innovation, dividing 28 million addresses of Bitcoin with a balance greater than 0, and with an estimated world population of 8 billion inhabitants; concluding as well that 0.35% of the world population uses Bitcoin.The author puts Bitcoin in the stage of users ‘innovative’, but acknowledges that this estimate is exaggerated, because a user or entity can have multiple addresses with a balance greater than 0. A statement was recently revised also by the consultant Glassnode in a publication; it also reported a historic high in the number of addresses that have at least 1 BTC.It’s hard to calculate how many active users there are in Bitcoin, as the owners tend to have more of a direction. Source: Geralt/ Pixabay.comLo is feasible is to identify the events that affect the adoption and diffusion of Bitcoin, and for that, we have a variety of studies and theories that in the past ten years have deepened this topic.Before knowing these research papers, we take into account the main theories that underpin the majority of research on the topic, how are the Model of Acceptance bio-chem (MAT) and the Theory of Diffusion of Innovation (TDI), both seek to explain the phases in which a groundbreaking event —ideological or technological— is adopted or assimilated by the society. Phenomenon that is not only analyzed from the practical advantages of an innovation in concrete, but the behaviors in user base that are conducive to adoption.

A model to study the adoption of Bitcoin

The study on the “Diffusion and Adoption of Bitcoin: Survey practice for business,” conducted by researchers of universities of South Korea, Singapore and New Zealand, concludes that characteristics such as ease-of —use that we mentioned in the previous paragraphs— and the relative advantage over other technologies, yes have a positive impact on the intended use of Bitcoin.The survey of 121 attendees of international conferences on blockchain in South Korea between April and October 2015, is in addition, a practical example proposed by researchers to implement it through a variety of businesses and industries throughout the world; and recognize the possible bias of the results to be a small sample located in a context influenced in favor of the cryptocurrencies and that was comprised of 97.5% for men.The variables taken into account to determine what factors influence the decision to use Bitcoin, they are: the relative advantage over other technologies, compatibility, ease of use, its visibility —interpretable as the degree of media exposure of the technology— the testing of the results from using Bitcoin, and finally, the image or reputation that is generated for a user to use Bitcoin.The study points out that Bitcoin takes advantage over other methods of payment, and that use blockchain is also a huge benefit to traders in terms of transparency and protection against fraud. Also, it would allow them to expand to markets little banked or where other payment methods do not reach.The obvious technological advantage may be supplemented by addressing the factors that would motivate the adoption of BTC, what they call evangelize. Do not take the word to show the benefits and future challenges of the technology, the ecosystem and the multiplicity of ideas of the Bitcoin originates and feeds.Another study, titled “Reasons and barriers to the adoption of Bitcoin how digital currency by the end-user (2017)” brings together among his findings that the group of people that don’t use Bitcoin yet, we also find the expectation of the adoption by other users, while showing concern about the volatility of the price of the criptomoneda and the matters relating to the security.The researchers conclude that it could reach a point of zero, where “everyone is waiting for all”, slowing down the adoption of Bitcoin, therefore indicate it is necessary to conduct more research on the topic.

Order spontaneous

The master thesis “Investigation on the diffusion of the innovation of the cryptocurrenciesmade by Matthew Wesley for the school of International Business and Entrepreneurship uses a variety of methodological techniques to conclude that the events that affect positively and negatively in Bitcoin must be worked between civil society and the government to reach a point of synergy where the adoption of this technology is given almost spontaneously or naturally.The proposal of the thesis is among their reasons, the theory of Nobel laureate Joseph Stiglitz, who points out how the implementation of a single currency in an extensive territory as the European Union. Not considered that there are economies of small, targeted, you may need other methods of payment or currencies to meet its needs endemic; causing so prele macroeconomic policy.Following this critical line, recently, the European Union said that to issue a digital currency global could bring great difficulties to the world economy if requirements are not met technological, legal, and operational to make it possible; something that they do not refuse.The study identifies a point of balance that is favorable to the adoption of the cryptocurrencies, which is reached when both the perception the user has about an innovation, as well as to implement evidence —and practice— to work synergistically, so that the value migrate in this case since the assets of Fiat, toward the cryptocurrencies; sustaining this in the “value of imaginary money”, a comment taken from the book Sapiens philosopher’s israeli Yuval N. Harari.Users prefer methods of payment easy-to-use, reliable and of good reputation. Source: Prostock-studio/ Envato Elements.This harmony, point of no return for the growing adoption of Bitcoin, would be set up in other words when the technology related to the cryptocurrencies is further developed and when the perception of the user —individuals, entities, governments, etc— match unanimously with the level of development of the technology.But for this to happen, it is necessary that forces participants to be aligned and to be persistent in the efforts to improve the implementation of the cryptocurrencies; as you run the risk of getting to a point where a certain group of users would expect to get more in-depth information before you adopt the technology. If you do not distribute this information in a genuine and honest between the community, the interest of some in the technology would be lost gradually.

More than users, are factors

The figures of adoption are elusive, but the factors that define them are identifiable. Although determining the number of users of the cryptocurrencies and its growth in time is unlikely, most serious studies agree in one form or another to identify the same factors that favour or not the adoption of the cryptocurrencies.In chapter 14 of the book “Blockchain Economics and Financial Market Innovation: Financial Innovations”, edited by Unit Hacioglu, professor of the School of Business, University Ibn ibn’i haldun, we find a quote that refers in turn to another study published in 2016, where we identify some security risks, the complexity of the use of Bitcoin for some users and the volatility of this criptoactivo as mitigating of the adoption of this tecnología.De similarly, the study recognizes the qualities of open-source software, decentralized and easy to run Bitcoin, and the not less important easy convertibility to other assets and currencies, as factors that favor their adoption. Finally, they warn that the perception about the ease of use is crucial for the adoption of an innovation, in direct reference to the model MAT.At this point we can make emphasis on the subjectivity of the user to evaluate the risks and benefits, as well as ease of use of Bitcoin. For example, something that mentions this same essay is how the irreversibility of the transactions may not be attractive for some users, since a transaction can not be returned unless it is an autonomous decision and consensus of the container of a transfer of BTC. To err is human, while Bitcoin is not wrong.

About the author

Caroline W.

Caroline is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2018, she joined CurrencyMarket24 as a writer.

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