Good Morning Everyone,
I shared a chart in a recent letter, that showed the Bitcoin Networks user growth compared with that of the internet. If you missed it, i’ve included it below..
The chart below was taken from a post by Willy Woo.
It’s a super interesting chart, and i believe the comparison between the growth of the internet, as a network, is very analogous to that of the Bitcoin network. The chart shows that in 1997 the internet (represented by the thin purple line) had around ~120m users. Bitcoin is represented by the thick green line, and shows that as of Jan 2021 there were ~135m network participants, meaning that Bitcoin relative to this specific metric is comparable in adoption to that of the internet in 1997.
Back in the early nineties (93/94) when i was 12 or 13 i used an IBM ‘Thinkpad’ laptop at school. This laptop had one of those little pointing devices in the middle of the keyboard, like a little finger joystick to control the mouse. It had a color 7” LCD display, which at the time was still pretty new - Black & white displays were still common. It also had a 4.4kbps PCI modem. Vintage tech.
I used to go to the school library at lunch or after school and stand behind the librarians desk. This was the only place in the library that had a telephone point that i could use to connect my modem to. I would connect to the internet and to various mIRC chat rooms, and bulletin boards, speaking with people on the other side of the world.
The world wide web (www) was only just getting started. One of the very first web browsers was called Mosaic and it became popular due to its graphic user interface (GUI) and that it enabled images as well as text.
Using a computer back in this era as a kid was viewed as strange and was not well understood (at all). It was very fringe and the perception was that you had to be a massive nerd to be interested in this kind of thing. People did not imagine if you fast forward 20 something years that 80% of the worlds population would use a laptop, let alone would carry a computing device (smartphone) with them everywhere - even to the toilet!
There was no Google, Facebook, Amazon or Netflix. The use cases in which these businesses were built, were for the most part, not possible yet, and certainly non-obvious to most. I don’t think many people (on earth) realised how big search would actually be, and the implications of it when google was first founded in 1998, let alone in ‘93 or ‘94.
If facebook did exist back then, it would have been much less compelling. The user-base may be a few hundred weirdo’s around the world communicating from their basements in plain text. The ability to be broadcasting from wherever you are at almost any moment was not possible. There were no smartphones with cameras, the data transmission was so slow and cost prohibitive to have large data plans, sending things like photos and video was essentially not possible, and certainly not at any kind of scale.
It’s important to understand that the network effect is like a self reinforcing feedback loop. Increased user growth, the continued development on top of the underlying protocol, as well as innovations in hardware, infrastructure and data transmission speeds and availability, all mix in, to enable the internet as we know it today.
Only with an open global protocol standard is this possible.
This open global protocol (TCP/IP) that everything has been built upon, is still the foundation of all the incredible benefits we enjoy from the internet today, and this has completely changed the way humans communicate, interact and transmit information and the speed of that transmission. Back in the 90’s there were a handful of broadcasting networks that had a complete monopoly on the broadcasting of information at scale.
Compare that to today, where anyone can create a youtube channel, a twitter account, create a podcast and can transmit information to the world. It is a complete reimagining of information transmission and global human communications.
In 1994 Tim Berers-Lee founded the World Wide Web Consortium (W3C), an international community devoted to developing open web standards.
It’s incredible to look back at the standards this community developed, especially in comparison to those of Bitcoin.
According to the world wide web foundation, these standards were:
Decentralisation: No permission is needed from a central authority to post anything on the web, there is no central controlling node, and so no single point of failure … and no “kill switch”! This also implies freedom from indiscriminate censorship and surveillance.
Non-discrimination: If I pay to connect to the internet with a certain quality of service, and you pay to connect with that or a greater quality of service, then we can both communicate at the same level. This principle of equity is also known as Net Neutrality.
Bottom-up design: Instead of code being written and controlled by a small group of experts, it was developed in full view of everyone, encouraging maximum participation and experimentation.
Universality: For anyone to be able to publish anything on the web, all the computers involved have to speak the same languages to each other, no matter what different hardware people are using; where they live; or what cultural and political beliefs they have. In this way, the web breaks down silos while still allowing diversity to flourish.
Consensus: For universal standards to work, everyone had to agree to use them. Tim and others achieved this consensus by giving everyone a say in creating the standards, through a transparent, participatory process at W3C.
Many of these standards and ideals exist within the bitcoin protocol.
If Bitcoin’s network adoption is relative to the internet in 1997, this provides a very powerful analog to try and gauge the current position of Bitcoin adoption through the arc of time, and highlights how early we actually are in the development and adoption of this technology.
The chart projects Bitcoin user growth at 2025 to be around ~1b users, and if you extrapolate it further, very likely >2b users by 2030.
In the exact same way as the internet, due it’s open, public and bottom-up nature, built upon a single global standard; as the number of network participants increases so to does the self-reinforcing effect, like a positive flywheel, where the growth of the network begins to accelerate and compounds at an incredible rate, unlocking new possibilities and capabilities that were previously inconceivable, just like we have seen with Google, Facebook, Amazon, Netflix and many others.
If you ever get stuck looking at short term price action with any concern, hopefully this context and perspective can be of value. As the saying goes.. “When in doubt, zoom out”.
The Bitcoin network is currently growing FASTER than that of the most powerful and transformational global networking protocol ever developed, which has changed humanity in ways that are difficult to truly grasp. By the end of this decade the number of Bitcoin users is projected to increase by almost 15x (1500%).
With every new user, comes more development, more innovation, better tools, better hardware and more incremental improvement, making it ever easier for more and more users to come on line and join this network.
The internet of money is being built before our eyes, and it is early days. Focus on getting educated and understanding how the world is changing. Zoom out, and prioritize the long term over the short term. The next decade is going to wildly exciting and full of opportunity. I couldn’t be more grateful to have had this experience in the 90’s, as it has laid the foundation for my understanding and conviction in the present.
There is no doubt in my mind. The future is built upon an open, decentralized and global standard.
I hope you have a great day, and i’ll speak to everyone tomorrow.
AK
