There's an old children's book series called The Great Brain that chronicles the escapades of John Dennis Fitzgerald and his older brother Tom Dennis (AKA the Great Brain) in a small Utah town circa 1896. The plot of the first book is centered around the Fitzgerald family being the first in town to install a water closet (flush toilet) in their home. The townsfolk were skeptical and mocked the stupidity of bringing the smell of an “indoor outhouse” into their home. Tom Dennis hatched a scheme to charge the curious townsfolk admission to watch the toilet being installed and later to flush it for themselves.
Of course, it didn’t take long for indoor toilets to become so accepted and ubiquitous that it’s a given in most of the world. But there was a time when the idea of doing your business inside the home was ludicrous and FUD-worthy.
Crypto and web3 have many skeptics, critics, and attackers who, at best, view it as silly and at worst, as “disgusting and contrary to the interest of civilization.”
From flush toilets to automobiles to the internet, we’ve seen this cycle play out again and again. A new innovation is created. A small number of people see its potential. Most don’t understand it. Many reflexively distrust it. Over time, however, truly disruptive technologies always become inevitable.
First, theorized in the 1950s by Everett Rodgers, adoption lifecycles for new disruptive innovations tend to follow a predictable bell curve.
Rodgers defines the qualities of these adopter categories in his Diffusion of Innovation theory:
- Innovators: Willing to experiment and take risks on technologies that may fail; high social status and financial liquidity; close to scientific sources and other innovators.
- Early Adopters: More discerning in tech choices than innovators; influential with other adopter categories; higher social status, education, and financial liquidity than later adopters.
- Early Majority: Above average social and financial status; adopt new innovations after watching early adopters work out the kinks.
- Late Majority: Highly skeptical; only adopt new technology after most everyone else has; lower financial and social status; risk averse.
- Laggards: Traditional and averse to change; older; last to adopt if they ever do.
Not every innovation captures the momentum and proves its use cases well enough to ride the wave through to mainstream adoption. History is replete with examples of breakthroughs that couldn’t break through to rise beyond the realm of innovators and some early adopters (Segway PT, 3DTVs). Others were overtaken on the upslope by superior innovations (e.g. iPhone making Blackberry obsolete). And some were maybe just before their time (Apple Newton, Google Glass, jetpacks).
We’re So Early
Just because the phrase has reached the cliche stage in its adoption curve doesn’t mean it’s not true. Web3 is very, very early.
DeFi and NFTs are the two current marquee use cases of web3. While the number of DeFi users is on a strong growth trajectory, at fewer than 5 million today, the DeFi user base is less than .06% of the global population.
The growth of NFT trading on the leading marketplace OpenSea has been even more parabolic. Still, at around 2 million purchasing users, only .025% of humans on Earth have exchanged cryptocurrency for an NFT on OpenSea. We’re clearly still on the far left side of the Rodg curve.
As for other web3 use cases, there are likely even fewer people participating in DAOs than in DeFI. Plus, I’d argue that trading crypto on centralized platforms isn’t exactly a web3 activity. So yes, we are indeed early—which also means that there’s still unlimited headroom for growth!
Rhymes with Internet
As the saying goes, history doesn’t repeat, it rhymes. In the mid-1990s, I attended a conference on The World Wide Web. The presenters spoke in hyperbolic terms about how the Information Superhighway was going to revolutionize everything. Yet, at the time, all they could demonstrate was how to build a basic “Hello World!” Web page with HTML that anyone in the world could view! Provided, of course, they had:
- The IP address of your page. Domain registration was cumbersome and search was lousy until Google arrived years later.
- A PC. Pre-internet, a lot fewer people owned PCs as the main use cases for a home computer were word processing, “desktop publishing,” and playing rudimentary games.
- A modem. Likely a laboriously slow 14.4 baud dial-up modem connected to a landline phone connection.
- Internet access. ISPs were a new business and AOL had not yet started carpet-bombing mailboxes with signup discs.
- Knowledge of how to use all of the above.
In 1994, the internet had what we’d now call serious UX and product-market fit issues. It had opened up a wide-open frontier of possibilities, but we’d only started to imagine what possibilities could be out there. I left that conference with two thick manuals and the sense that the internet might be an interesting hobby. Like ham radio without as much equipment. At the time, I didn’t have the vision to imagine what it could become.
It would take another 25 years, billions of dollars, multiple market cycles, and the collective genius of countless visionaries to get to the point where we can stream 4k movies on a pocket-sized computer while waiting at the DMV.
Today, we don’t think of the amazing things we do with our connected devices as doing internet things. It’s just how we live. The same will happen with blockchain-powered innovations. Web3 has opened another frontier of possibilities, and we’ve only begun to explore it. Sooner than the Early and Late Majority realize what’s happened, they’ll be tapping into cryptocurrency, NFTs, and other blockchain innovations to do incredible new things. They won’t call it crypto or web3, it will just be how we live. But for now, we are early. Enjoy it.