171009 Alt-Indicators for Bitcoin

Bitcoin is such a novel sort of investment that it is difficult to find ways of evaluating its worth or potential.  Traditional indicators such as ROI and EPS are non-existent.  Likewise, Bitcoin volume and market cap can be very misleading. So what is an investor to do?  The next series of posts will propose a spectrum of unconventional methods for judging Bitcoin viability and worth; some serious, some less so.

First, let’s address the big question: Is Bitcoin a bubble or is it here to stay?  To answer this primary question, find people in your life you can use as indicators.  Four types are required though you can have more than one person to fulfill any one type.  The four types are: visionaries, early adaptors, Main Streeters, and laggards, after Geoffrey Moore’s excellent book, Crossing the Chasm. For an in-depth discussion of these four types, I strongly suggest reading Moore’s book.

A visionary is someone who can take a leap across a technological frontier to see the viability of a solution not yet common knowledge, to solve a business or societal problem.  A visionary is willing to put up with a few hiccups and roadblocks in order to see his or her vision come into being.  An early adaptor, too, is willing to go where no one has gone before; to use something new on the cutting edge of technology.  The EA is “the first one on the block to use…”. Main Street represents the vast majority of people regarding technology adoption.    They are never the first, just want things to do what they are supposed to do, and are basically risk adverse.  Laggards are last.  They will not purchase new technology until it is no longer new.  They aren’t first, second or third. You get the idea.

OK. Find these people in your life.  Talk to them.  The visionaries will already have considered or purchased Bitcoin.  The early adaptors are looking at Bitcoin now.  Main Streeters probably have heard of Bitcoin but don’t know anything about it. They will voice all sorts of objections to Bitcoin, while paying attention to the details and filing it away under “Things to Look at Again Some Day Department.” Laggards will probably not want to talk about it.  They don’t understand it, nor do they want to.  They say things like “Isn’t that money used by drug lords and cyber-thieves?”

To give you an idea of how this spectrum shapes up, use the following numbers as a rough guide: visionaries – 10%; early adaptors – 15%; Main Streeters – 50%; Laggards – 25%.  In general, we are probably entering into early adaptor territory with about ten percent of those that will invest in Bitcoin already doing so.  That leaves another 90%.  Keep in touch with these people in your life.  When you hear one or more change their tune, you can judge where Bitcoin is at.  I’d like to hear from you, too.