Highlights:
This past weekend, the number of registered users on Binance reached 200 million. The explosive growth of our user base reflects the accelerated rate of adoption of digital assets and blockchain.
This process bears significant similarities to past cycles of technological disruption, from which we can learn as we move toward the billion milestone.
Currently, blockchain and Web3 have more to show in terms of real-life usage and usefulness than any of the paradigmatic technologies of the past in the similar early stages of their development.
As in previous cycles, incumbents face a strategic choice between embracing innovation and risking obsolescence.
A few days ago, Binance's user count reached 200 million people. This not only represents a great achievement for our organization, but is a very important event for the entire blockchain industry, as well as a significant milestone in the history of innovation.
Throughout human history, technological innovation has continually disrupted established industries and reshaped economies. Time and again, this process pitted the incumbents, the established players, against the insurgents, the new innovators. A commonly observed pattern is the initial indifference of incumbents toward new technology, followed by its gradual adoption, forcing established hegemons to adapt or face obsolescence.
Today, the rise of blockchain technology and the transition of the dominant Internet paradigm from Web2 to Web3 represent the latest wave of disruption. History does not repeat itself, but it often has similarities, so there are parallels to observe and lessons to be learned by examining how the current blockchain-led innovation cycle compares to historical ones. As we celebrate our 200 million users, where are we in the current iteration and what is Binance's place in it?
Acceleration of Technological Disruption Cycles
The pace of technological innovation has accelerated with each successive cycle. The first sparks of the Industrial Revolution, beginning in the 1760s with the steam engine, took many decades to tangibly transform industries. Pioneering experiments and inventions in the field of electrical research and electrical engineering in the first decades of the 19th century did not result in widespread electrification until the early 20th century.
Several decades later, the Internet revolutionized the world more rapidly. However, beginning with ARPANET in the 1960s and 1970s, it remained in the realm of academics and hobbyists until the emergence of the World Wide Web (essentially Web1) in the early 1990s catalyzed mass adoption on a global scale. thanks to the layer of utility and accessibility it added to the existing Internet infrastructure. After that, it only took several years for technology to fundamentally transform communication, commerce, and entertainment.
Today, blockchain and Web3 are advancing at an unprecedented pace. Bitcoin, introduced in 2009, laid the foundation for a new asset class that captured global attention in less than a decade. The time between the emergence of the technology and the widespread deployment of accessible consumer applications based on it has been remarkably short. Millions of people around the world already use digital assets to efficiently transfer value online, participate in decentralized finance (DeFi) activities, and benefit from various smart contract-powered functionalities, from digital art to decentralized autonomous applications.
Some people remain unconvinced, arguing that real-world utility is slow to materialize. However, if you put everything in historical perspective, blockchain and digital assets have more to show - and in a noticeably shorter time - in terms of real-life use and generating consumer value than any of the paradigmatic technologies. From the past. And we're still very early in the game, with enormous growth potential and an adoption curve that suggests we're confidently heading toward mass adoption.
Diffusion of Blockchain Innovation
I think the growth of Binance's user base is a good proxy to demonstrate the exponential nature of digital asset adoption.
Launched in July 2017, Binance established itself as the world's largest crypto platform by trading volume in six months. However, it was not until May 2021 - almost four years later - that we reached the milestone of 50 million users. The next hundred million, going from 50M to 150M, took much less time and was achieved in just 26 months, in June 2023. Then, it took us less than a year to break the 200 million threshold.
Every time I look at this curve, Everett Rogers' classic theory of diffusion of innovation comes to mind. According to the theory, diffusion is the process by which an innovation is communicated over time among the participants of a social system in a sequence of stages: knowledge, persuasion, decision, implementation and confirmation.
People move through these stages at different rates, resulting in varying adoption times. Rogers categorizes adopters into five groups based on their willingness to embrace new technologies: innovators (approximately 2.5%), early followers (13.5%), early majority (34%), late majority (34%), and laggards (16%). ). Innovators are early adopters and willing to take risks, followed by early followers, who are often opinion leaders who encourage further adoption.
Even if all crypto users were Binance users (which is clearly not the case), 200 million people is already a slightly larger share than 2.5% of the world's population. In reality, there are many more of us than that. By all accounts, the innovators are already in, with early followers currently joining the movement en masse and spreading the word as we move toward an early majority – whose arrival, as some theorists have concluded, marks the beginning of mass or self-sustaining adoption. With such a steep curve, we might get there sooner than we think.
Cooptation or Obsolescence
Historically, incumbents have often dismissed new technologies and the insurgents driving them, only to later recognize the usefulness and value of the innovations. When Alexander Graham Bell invented the telephone in 1876, telegraph companies showed little interest, seeing it as a mere novelty. However, the telephone's ability to provide instant voice communication soon proved its worth, leading to widespread adoption. Similarly, personal computers were initially viewed largely as toys for hobbyists, with widespread skepticism about the usefulness of personal computers. However, the rise of productivity software and the Internet transformed PCs into essential tools for business and personal use.
In the current era, blockchain technology faced initial skepticism from traditional financial institutions. However, its unique value proposition – disintermediation, transparency and security – has driven growing adoption, both by individual users and businesses.
When a new technology demonstrates its value, incumbents face a critical decision: adapt or become obsolete. The transition from horse-drawn carriages to automobiles in the early 20th century forced carriage companies to adapt or go out of business. Similarly, the rise of digital photography saw Kodak fail to adapt, leading to its decline, while companies like Canon and Nikon prospered by embracing the new technology.
Although there are still detractors, many of the current incumbents have chosen to proactively adapt to the wave of blockchain-led disruption rather than ignore or fight it. Financial giants like BlackRock and Fidelity, which are spearheading the recent Bitcoin ETF rush, are perhaps the most vivid example. Many other major players in their respective fields, from JP Morgan to IBM, are exploring blockchain technology and integrating it into their operations to improve efficiency and security.
Those that fail to adapt may face obsolescence as decentralized systems gain prominence. The current blockchain revolution reflects past cycles of innovation, where incumbents either co-opt new technology or risk being left behind.
As blockchain and Web3 technologies continue to evolve, incumbents must recognize the potential for disruption and act quickly to integrate these innovations into their processes. The future will likely see a combination of co-optation and competition as blockchain reshapes the financial landscape, as well as numerous other industries. If the pace of growth of the Binance community is indicative of anything, this future is just around the corner.