2.1.0. The Four Phases of Crypto Growth
The four phases of the growth of cryptocurrencies are:
2.1.1. Creation Phase
This is the phase in which the technology has been created. It is the birthing phase.
Characteristics of the Creation Phase
The common characteristic feature of the creation phase is general apathy. That is, it is the phase when only a few people (the creators of the technology and a few smart guys) know about the birth of the technology.
The general public often pays little or no attention to the invention. This is because the general public is yet to be aware of the usefulness of the new technology.
This explains why when Thomas Edison hung his electric lamp at his laboratory in Menlo Park, New Jersey, USA, and later by the street side in 1879, no one paid attention, except a few passers-by who stopped over to cast just a glance at the lighted lamp.
If they had known that the small lighted lamp was heralding the birth of commercial electricity in the world, the action of the general public would have been different.
In the same manner, when Satoshi published his whitepaper in October 2008, heralding the birth of cryptocurrency, no one paid any attention except a few IT experts.
Market Value at the Creation Phase
At the Creation Phase, the market value of the technology is almost zero; only the creators know the real worth of their invention.
That explains why Laszlo Hanyecz, a Florida-based programmer, used 10 000 Bitcoins to buy two pieces of pizza from Papa John’s in 2010. If Laszlo knew that the 10 000 Bitcoins would be worth 600 million dollars in about 10 years, he wouldn’t throw away his Bitcoins for a morsel of bread!
2.1.2. Denial Phase
This is the second phase of the growth of any new technology. It is the phase when the new technology begins to be known in the society.
Characteristics of the Denial Phase
The denial phase is characterised by renunciation and, in some extreme case, outright rejection by the society. At this stage, many people dismiss the new technology as being a scam, just a ‘fad’, or a joke.
Because there is general ignorance about what the new technology is all about, scammers often take advantage of such ignorance to have a field day. If you know this, you will not be surprised to know that the Blockchain technology that birthed bitcoin has been infiltrated by scammers.
As a result of such scams and confusions, good intentioned people and authorities will want to move in against the technology. Therefore, it is not surprising to see some governments and their banks attempting to outrightly ban cryptocurrencies.
Market Value at the Denial Phase
Because of the infiltration of scammers, the true market value of the new technology is not yet known by the general public. However, at this stage, often, some investors will take time to study the new technology in order to ascertain the true worth of it, and based on what they find out, they take a “calculated risk” to join in the technology. These are the smart investors, and they are usually few in number.
Such smart investors reap good financial fortunes from the new technology because they join early enough when the cost price of the technology is still low.
Consider this example:
When the Chinese Canadian, Changpeng Zhao, first heard about Bitcoin in 2013 from a venture capitalist with whom he played poker, he didn’t dismiss the information with a wave of the hand. He decided to look more closely into it.
That led him to join Blockchain.info as an employee, which allowed him to work closely with well-known Bitcoin evangelists like Roger Ver and Ben Reeves. This was the denial phase of the blockchain technology when many people associated cryptocurrencies with scams.
Changpeng later went ahead to found the exchange Binance, the largest crypto exchange in the world with more than 500 million dollars in daily trading volume.
It is no surprise Changpeng has reaped good financial fortunes for taking such steps. According to Forbes, Changpeng’s personal net worth was reported to be 2 billion dollars in 2020, placing him among the world’s billionaires!
Imagine if Changpeng has dismissed the idea when he first heard about Bitcoin in 2013! No doubt he is a smart investor.
You too can be a smart crypto investor because the Crypto Market is at its early stage of growth.
2.1.3. Adoptive Phase
This is the third phase of a technological revolution during which the society has gradually started to accept the reality of the new technology.
Characteristics of the Adoptive Phase
The adoptive phase is when the technology has been unquestionably ascertained to be beneficial to the society. As such, gradually, many people, companies and institutions try to come in to adopt the technology for general usage. That means the technology has now become well known.
Market Value at the Adoptive Phase
The market value of the technology is now rising as more and more people are getting involved and using the new technology. A lot of financial fortunes are made by these early adopters of the new technology.
2.1.4. Regulatory Phase
This is the fourth phase of growth during which the technology attracts the cutting knife of regulators.
Characteristics of the Regulatory Phase
At this phase the technology has come to be accepted as the new normal. The general public is now fully aware of the presence of such technology and have adjusted to its existence.
Governments and other regulators will also want to get a share of the new technology, and often, with the excuse of bringing sanity and protecting the technology and its users, government authorities will start to enact some rules on how the society should engage with the new technology.
Market Value at the Regulatory Phase
At this regulatory phase, the market value of the technology is well known. Smart Investors, usually few in number, who jumped at the new technology at the Denial and Adoptive Phases have made their profits and will, by now, be smiling with their pockets loaded.
At this regulatory phase of the new technology, many people will want to join in, but the profits will not be as much as what those smart investors have reaped.