Bitcoin, a Living Service

I was asked recently why Bitcoin is becoming popular with millennials. To answer, I have three points.

First, Bitcoin works. As the Bitcoin evangelist, Andreas Antonopoulos pointed out in a tweet recently (his twitter feed and youtube videos are a good source of Bitcoin insight), banks are making press announcements about successful international blockchain transactions (typically a few test transactions), but Bitcoin has had millions of successful ones for years. In fact, to-date there have been over 170 million Bitcoin transactions, with a recent peak of 326 thousand transactions on one day late in October 2016.

Second, Bitcoin is a payment network experiencing positive network effects. Bitcoin is an economic phenomenon enabled by technology, where the more it is used, the more people want to use it – this is a positive network effect, similar to that in social media such as Twitter or Facebook where the more people there are connected, more people want to connect. Bitcoin the payment network also enables Bitcoin the digital asset network, where Bitcoin is a store of value. The more it used as a store of value, the more valuable it becomes, and the more it is used as a store of value. A year ago there were roughly 300 thousand unique addresses using Bitcoin each day; today there are roughly 500 thousand daily. The Bitcoin network is getting bigger, more valuable and is being used by more and more people, including millennials.

Last, Bitcoin exhibits the characteristics of a “Living Service”, a phrase coined by the digital design agency Fjord. A Living Service is a real-time service at people’s finger-tips that enables them to live their digital lives. Examples of Living Services include the Citymapper app for finding your way around London and other cities of the globe, Instagram for sharing pictures with your friends or Airbnb for finding accommodation. Bitcoin is becoming easier and easier to use through investments Bitcoin companies are making in consumer friendly wallets and merchant services – BitPay, Blockchain.info and Circle are examples of these Bitcoin companies. As a result, Bitcoin is becoming a Living Service that is driving positive network effects, and millennials are noticing it. For example, in online gaming where Bitcoin is increasingly available to make in-game purchases or receive rewards - players can see it is there, pick it up and find it easy to use.

An immediate obstacle Bitcoin has to overcome is its current capacity limitation (around 300 thousand transactions per day) which is already being hit. However, it is evident that the longer Bitcoin endures, the stronger it becomes. It is a self-sustaining phenomenon, reinforced by positive network effects that are drawing in more and more people, including millennials.