Nov. 28, 2017 (The Ferowich Report)—Bitcoin’s bull market continues to defy skeptics while the total market value for digital assets grows by the day. By benchmarking blockchain and bitcoin to internet and email with a simple back-of-the-notecard heuristic, one hedge fund manager argues the crypto craze is still in its infancy.

The benchmark: In 2017, about 0.5 percent of the total population owns bitcoin or satoshis (1 bitcoin = 100,000,000 satoshis), which is really close to total email adoption rate of about 0.25 in 1994, according to data compiled by Ari Paul, co-founder at BlockTower Capital.

Sometimes it seems like everyone is talking about bitcoin, yet less than 1 percent of the world owns any,” the former derivatives trader observed in a Monday column for Forbes.

Caveat: Tracking the user basis is impossible. One person can create multiple addresses, and a group could use one wallet address. BlockTower Capital derived the 0.5 percent figure from Coinbase user data and Garrick Hileman and Michel Rauchs’ 2017 study published with Cambridge’s Centre for Alternative Finance.

The logic: On Paul’s analysis, in the previous tech epoch internet was the overarching technological breakthrough while email was the most popular use case for the technology.

In the new epoch, blockchain is the underlying innovation with programmable money, bitcoin, being the use case with the most global traction.

Paul reasons that comparing adoption rates for the most popular use case provides an approximation for how developed the umbrella technology is. The particular applications first start out as an interesting subject for scientists and engineers, later find utility at an enterprise level, and finally disperse to retail use. It’s at this final stage where the application goes through a discontinuity jump point and starts to experience non-linear self-reinforcing growth. When the user base volume increases the value of the application grows for each user.

Nevertheless, there are few standard interfaces to access bitcoin, the network effect of holding bitcoin is small, and technical kinks like transaction speed haven’t been ironed out and threaten to divide the community.


Why it matters: Bitcoin is encountering structurally similar issues to technological antecedents that transformed western society.

Market scan: Cryptocurrency’s aggregate market value grew from $18 billion at the beginning of 2017 to more than $310 billion as of Tuesday. Venture Coinist’s coin screener is a helpful and easy to use resource for getting up to speed on the hottest and coldest cryptocurrencies of the day.