Political
| Edelman Table (2013) A Decentralisation of Trust, respondents answers to trusting others (Global average) |
| 61% trust ’a person like yourself’ |
| 43% trust ‘CEOs’ |
| 38% trust ‘government officials or regulators’ |
Table 1: Excerpt from Edelman Trust Barometer (2013)
In a June 2013, TED talk Kemp-Robertson utilises the Edelman Trust Barometer (2013) report to highlight a global shift towards a decentralisation of trust. The traditional hierarchy of placing trust in the government has begun to wane and more developed markets like the United Kingdom and Germany possess a lower than average worldwide score of 38%. Therefore, he argues money as an expression of value and trust bestowed upon others in agreeing this value is wavering in current government backed system. In this digital age where we are able to create value online, together with the current sentiment of placing more trust on ‘a person like yourself ’to reciprocate said value “Bitcoin suddenly start[s] to make more sense”. With Bitcoin community framework and its open source code, run by fellow Internet users” is there a reason for the government to be in charge of money anymore?”
Economical
The arrival of Bitcoin, the post 2007 financial crash environment combined with trust in banks at an all-time low (Kemp-Robertson, 2013) synthesises an environment which challenges us to think about traditional central institutions and money. The prevailing practice of quantitative easing has caused concerns in the confidence of current money inflation in the likes of Warren Buffett, as interviewed by Evans-Pritchard (2013) in The Telegraph.
Rifkind of The Spectator (2013) writes that the impetus behind Bitcoin is that “it removes the need for trust in currency; trust in bankers, trust in governments”. As faith in the current system decreases people put their faith elsewhere, alluding to the 2013 Euro Cyprus bailout. Indeed there was a spike in both the volume being traded and the amounts being paid in Bitcoin that matches the period when the Cypriot government announced that all high Street bank savers deposits would be tapped (Arthur, 2013).
If the exchange value of a currency reflects the trust in a monetary system; during the 2013 Cyprus bailout high street the balance of trust can be seen between the Euro and Bitcoin. Banks were closed and individuals were denied access to their Euros with the possibility that the government would tap into savings accounts to aid a government bailout. The result was that on the 3rd of April 2013 The Guardian (Arthur, 2013) reported the value of and individual Bitcoin climbed to $147.00. Bitcoin’s ascent started on 19th March 2013 where it was valued at $47.00. Wider implications of this movement of trust are that the majority of the world relies on government back currencies. The Cyprus bailout is a proof of concept that people can now shift their assets into something outside government control. It is shown in the numbers that the public were not afraid to put their faith in the value of a digital currency; even above the 20 year old government backed incumbent.
“Bitcoin may or may not ultimately prove to be the right implementation, but it is a compelling concept that offers a window into a potentially profound paradigm shift in how we think about the future of money on the web.” (Ferrara, 2013)
Social
According to the empirical investigations of Muir (1988), Lee & Moray (1994), and Kini & Choobineh (1998) both have found that trust between humans and machines plays a significant role in determining the use of a computer system. “Trust is a very important factor for successful online transactions” (Eastlick et al., 2006).
With the World Wide Web making electronic commerce possible since 1990 the exchange of products and services online has grown at a staggering rate. In 2012 the global B2C e-commerce sales grew 21.1% to $1.097 trillion with 18.3% expected this year (emarketer.com 2013).
Issues of trust have plagued Bitcoin historically but with numerous and legitimate merchants ready to transact in this new medium obstacles do not only arise from its abstract nature of value. Ferrara (2013) writes “opponents of Bitcoin claim that this virtual currency allows for exchanges made in the dark corners of the Internet where anonymous buyers can purchase any number of illicit items from anonymous sellers. While there might have been issues with illegal activities in the early days of Bitcoin, the market has changed dramatically in the past several months.”
Technology Adoption Lifecycle
The technology adoption lifecycle (TAL) originally penned by Beal et al. (1957) to model the uptake of new technologies has been adapted in Moore’s (1998) book Crossing the Chasm. The first 3 of the six stages of TAL are pertinent when considering the social environment that Bitcoin is currently in.
Figure 1: TAL
Figure 1: The technology adoption lifecycle (Moore, 1998)
As Bitcoin is considered to be somewhere within the first few stages “innovation enthusiast”, “early adopters/ visionaries” the next step the technology faces is traversing “the Chasm” to gain wider public usage. The copious amount of media coverage is indicative of Bitcoin’s monumental political, economic, social, and technological implications so to model its acceptance is crucial to Bitcoin’s future progress. Market strategy and positioning and an enticing customer proposition are required to ensure that Bitcoin companies correctly navigate the Chasm to push Bitcoin towards majority adoption.
Each segment of the TAL has different characteristics, the current population of Bitcoin users are at the “early adopters/ visionaries” who have different characteristics than the majority. If it is speculated that the current Bitcoin community falls in this category then this difference must be taken into account in the analysis and synthesis of business implications.
Bercovici writes for Forbes (2013) about the pattern of acceptance encountered by internet innovations. “As a company whose business proposition has gone from kind of weird to utterly commonplace in the space of a few years, OKCupid.com has always been comfortable with novelty. Now it’s embracing a new technology that strikes a lot of people as too futuristic for comfort: Bitcoin” mirrors the taboo of online dating a few years ago with the current status of Bitcoin. OKCupid.com like Bitcoin today suffered from its share of unfamiliarity and niche usage.
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