...by Daniel Szego
"Simplicity is the ultimate sophistication."
Leonardo da Vinci

Saturday, December 2, 2017

Diffusion of innovation and Blockchain

The diffusion of innovation model shows the maturity of a technology. According to the model, there are around five phases of the technology innovation distinguished by the group of users: innovators, early adopters, early majority, late majority and laggards (Figure 1).

Figure 1, diffusion of innovation model

It is an interesting question where we can find blockchain at the moment in this model. The first question how big is the market. Well that is difficult to tell, on the one hand potentially everyone in the world can be a user above certain age, let we say 15. Considering the 7.6 billion people, with 27% under 16, that means around 5.5 billion potential customer. If we however consider the fact that not only people but IoT or intelligent devices can be regarded as end-users, the number of potential customers can be much bigger.

So the question is how many blockchain users are throughout the world. As the entry point of the whole crypto world is Bitcoin, let we consider for the first run the potential number of bitcoin users. The total number of bitcoin transaction from the genesis block is less than 280 million. If we estimate that an average Botcoin user makes aon average 5 transactions, than we can calculate with 56 million users that is around 1 percent of the whole number of potential customers, even if we only consider people. That makes us to draw the conclusion that we are very much in the innovators phase. Certainly, it is another interesting question how fast can be a bigger majority reached.