The Three Generations Theory: How Bitcoin Attained Mass Adoption in 60 Years
Large-scale Bitcoin adoption is unlikely, regardless of whether Bitcoiners like it. It will take many generations for Bitcoin to be accepted into society. It is part 4 of his “Remnant” Series. “Bitcoiners are known for overestimating how quickly Bitcoin will “take over the globe” and “be widely adopted as money.” I have been in that camp for a while now. But, I think I am changing my mind about Bitcoin. You can call it patience, temperance, or a dose if humility, but I’m trying to bring some realism to the often exaggerated perception of Bitcoin among us. But, as you’ll note, I think on a longer time-scale, none of us are “bullish enough” (hat tip CK).Let’s dive in.Bitcoin Is A Techno-Socio-Economic TransformationPeople are very quick to project technology adoption curves onto Bitcoin. But the problem is that Bitcoin is not just a technology.It’s not just a smartphone, or a computer, or a social network, or a new stock or security, or a new payment method, or a search engine, or a messaging platform, or any other new product, app or service.Bitcoin is an entire techno-socio-economic transformation. It’s a new way to make money, and it’s completely different from any previous primitives. These are huge benefits and huge hurdles. Bitcoin has the greatest upside. If it is stable in supply and the market it’s going after is global money, then it will become the standard against which all stock, property, vehicle, handbag, or other item on the planet is measured. It will also mean that Bitcoin will eventually be the most liquid and valuable “united of value” on the planet. It is a paradigm shift if it is incompatible with the existing. If it is superior (which it has proven to be in every important financial dimension), it will not only “compete” with the existing guard, but will replace them completely. This is not a “carving out of a new market,” but a winner-take-all and, fundamentally, “change-the-nature-of-the-game” kind of transformation. It’s much more. It will not be easy to become global money. There will be many obstacles and dead ends along the way. Even with the most willing of partners, change is difficult at the best of times. We don’t have either. The nature of paradigm shifts means that most people don’t see them. And even if they do, they are often unable to understand them. It takes time to reach critical mass, whatever that means, and even longer to reach “mass adoption”. These are real obstacles that you need to understand. You can’t close your eyes and pretend that everything will be fine because NgU always happens. No. No. We are fighting the establishment and the cultures we grew up in. There is more change than anyone could imagine. I don’t want to discourage you from Bitcoin or make you feel like you’re going to die before you see the upside. I am trying to a) inspire you and b) give you some realism to help you prepare your mind to quit playing short-term games. You must pace yourself. Bitcoin is a marathon and not a sprint. The Three Generations TheoryThe large-scale, socio-economic shifts that occur over time take generations to settle in and normalize. Each successive change brings with it a new understanding and relationship to Bitcoin. Let’s look at these…Generation One – The Infection StageWe are now in the first generation Bitcoin. This is the first chapter or “era”. This “era” or generation will last 20 years and will be the “infection stage” for Bitcoin. It is a virus that attaches to hosts and causes it to spread further. Its purpose is to infect key infrastructures, key minds, and key systems of the current paradigm. It must first sneak in as quietly as possible, then form a symbiosis to the host as it grows, so there are mutual benefits for both the ever-expanding host and the virus (in this instance, Bitcoin). It had to demonstrate a substantial, commercial “proof-of-concept” with Silk Road. It had to go through the early stages of monetization (Mt. It had to go through an early stage of monetization (Mt. This leads to a lot of speculation until we reach significant market capitalization or liquidity. It’s linked to markets for a reason. While there are signs of decoupling, it is still early in the process and people will continue to view it as a “risk-on asset” in the near future. However, I believe they miss the point. Money is what makes the world go around, and this is more true than ever in the modern, materialized world we live in. Bitcoin must be an economic and financial animal to make the greatest impact and ensure the best symbiosis. To fix the debauchery, Bitcoin has to subsume it and then slowly, or like an anti-virus, infect the hosts and change their behavior. This is a well-known example. You can read more about this effect in Saifean Ammous’ article in The Bitcoin Times’ “Austrian Edition”. “Making time preference low again.” So there you have it. Generation one, a 20 year time span. We are now 15 years into the journey and we are on track. We still have five years before the next generation. In these five years, we will see two more halves, a lot of speculation, and a real acceleration towards that liquidity or saturation in market capitalization I mentioned earlier. Behind the scenes, things are being built to prepare for the next generation. This brings us to Generation Two: The Infrastructure Stage. Imagine being born in 2009, the year Bitcoin was created. You grow up in a world that has always had Bitcoin. As a child, you assumed that money was a digital thing. This is why opening bank accounts or carrying around printed bills and plastic cards seems strange to you. But, in 2029, speculation may not have been on your mind. You might see a problem and view Bitcoin as a tool that can help you solve it. At this stage, bitcoin’s volatility would be lower and its price would be higher. Along with other abstracted layers that are anchored in Bitcoin, things like the Lightning Network will become more advanced. You view all of this emerging infrastructure as a toolbox, not a speculative asset. You might see other things in this way and decide to gamble with them. However, Bitcoin has matured and the volatility is lessened. And, because so many services now offer Bitcoin as a funding option, it becomes the standard against which your gains will be measured. It’s not the first speculative asset. You might even be able to trace your roots back to the first generation of Bitcoiners. Your parents may have taught you some principles or passed on bitcoin to you, and you grew up with it. Bitcoin is not something that has “always been there,” but it is something you understand deeply, given the time period you grew up in. Think about how you and your generation will see Bitcoin and how you will all use it. It will be completely different. There will be a cultural and normative element that views Bitcoin foreign or speculative. They will fight to keep the past alive, despite all that is happening. This era will see the clash between the new builders and generation one bitcoiners on the one hand and the rest of the old world elite who still have much of the fiat wealth (stocks bonds, property, stock, bonds, property, enterprise shitcoins etc.). In the early years of this era, generation one and two Bitcoiners will still be outnumbered. However, no great man ever gave up on a fight, no matter how difficult the odds. If you take this period out to 20 years, I don’t think anyone can begin to imagine the infrastructure, products, and services that will result from it. And how the tide will change. This brings me to Generation Three: The Mass Adoption Stage. This is the generation of mass adoptive parents. This is the age of our children’s children. This is where our children’s children will grow up. You might think, “No man.” It will happen quicker because of all the tech that’s being built by then. “But I’d like to counter that. “Yes, lots of tech will come out by then, but I’m fairly certain that many people will still be reluctant to sell their homes, cars, products, or services for internet money. This number will be significantly smaller, but it’s not likely that large corporations, governments, and people who have made it big in their lives by using one method of operation will trust a 40-year old money over things like property that has been around for thousands. That will take time. This is why I believe the third generation will be the most popular. They will grow up in a world with superior financial technology and an economic system that allows them to use bitcoin capital. Bitcoin is the most liquid, most accessible, most trusted, and most reliable form of capital. This world is 2069. This is where Bitcoin really comes of age. This is when fiat dies, dissolves, or becomes a relic of the past and Bitcoin becomes both the global settlement layer as well as the global currency. It’s the stage at which Bitcoin or an abstracted application layer embedded into it becomes an integral part almost all technological applications used worldwide. Bitcoin has become both a global settlement layer and a global money. It’s fascinating to think about. It will be a new paradigm. I am confident about the next five years, and have a level to go for the second half of the second era. However, I find it difficult to predict what will happen at each stage. Each day passes, each new satoshi is held by each user, each new merchant accepting bitcoin, each new Lightning channel opened and every new node that runs, Bitcoin grows. Unfortunately, many of us will not live to see this. This is the straw that we have drawn. Our generation has given us both the gift and curse of being the founding fathers for a new world. Although we won’t get to enjoy the fruits of our labor, we will be remembered as the generation that laid the foundations and first stones for the cathedrals built in the feudal and ancient eras. They wouldn’t live to see the structures completed, but they would be remembered as their founders. It is not Google, Apple or Facebook. It is not a smartphone, Visa, PayPal, Visa, stock, or commodity. It is so much larger than all of them combined. It will take some time for people to accept it. It will take our lives to make it a reality. This is not to say that we should be shot but that we must allow the next generation to take its place. Bitcoin will flourish once we’re gone. I hope you remember that when you think about Bitcoin, it is important to not project technology adoption curves onto it and, through disappointment, try to tinkering with it. It doesn’t always have to be fixed or upgraded. In fact, Bitcoin’s most important feature is its ability to remain the same. This will allow people to trust it more than what they can verify. This is why Bitcoin will eventually be the most trusted monetary and economic layer on Earth, after a few generations. Follow me on Twitter at SvetskiWrites for more information. Also, keep an eye on my new book “The Bushido Of Bitcoin,” available on Geyser.fund starting March. OpenTip is a new Bitcoin app where you can tip Bitcoiners to do work you value. You can find that here:
This guest post is by Aleksander Svetski. These opinions are not necessarily those of Bitcoin Magazine or BTC Inc.