Key findings:
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, which we can learn from as we move towards the billion milestone.
Blockchain and Web3 already have more to show in terms of real-life usage and utility than any of the past paradigm-shifting technologies at equally early stages of their development.
Similar to previous cycles, incumbents face a strategic choice between embracing innovation and risking obsolescence.
The number of Binance users has reached a staggering 200 million people. This not only represents a huge achievement for our community, but also a significant event for the entire blockchain industry and an important milestone in the history of innovation.
Throughout human history, technological innovation has continually disrupted established industries and reshaped economies. Time and again, this process has pitted the incumbents, or established players, against the insurgents, the innovative entrants. A common pattern is incumbents' initial indifference to new technology, followed by its gradual adoption, which forces incumbents to adapt or face obsolescence.
Today, the emergence of blockchain technology and the transition from the dominant Web2 to Web3 internet paradigm represent the latest wave of disruption. History does not repeat itself, but it often rhymes, so there are parallels to be noted and lessons to be learned as we examine how the current cycle of blockchain-led innovation compares to historical events. 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, which began in the 1760s with the steam engine, took many decades to tangibly transform industries. Pioneering experiments and inventions in the field of electricity research and electrical engineering in the first decades of the 19th century only resulted in widespread electrification in the early 1900s.
Fast forward several decades, and the internet has revolutionized the world more quickly. Still, starting with ARPANET in the 1960s and 1970s, it remained the domain of academics and enthusiasts until the emergence of the World Wide Web (essentially, Web1) in the early 1990s, which catalyzed mass adoption on a global scale thanks to the layer of utility and accessibility that it added to the existing Internet infrastructure. After that, it only took a few 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 implementation of consumer-accessible applications based on it has been remarkably short. Now, millions of people around the world use digital assets to efficiently transfer value online, participate in decentralized finance (DeFi) activities, and benefit from various functionalities powered by smart contracts, from digital art to decentralized autonomous applications.
Some people remain skeptical, arguing that real-world utility is slow to materialize. However, if we put things into historical perspective, blockchain and digital assets have more to show – and in a remarkably shorter amount of time – in terms of real-life use and consumer value generation than any of the paradigm-shifting technologies in the world. past. And we're still very early in the game, with huge growth potential and a rising adoption curve that suggests we're moving confidently toward the mainstream.
Diffusion of blockchain innovation
I believe that the growth of Binance's user base is a good indicator to demonstrate the exponential nature of the adoption of digital assets.
Launched in July 2017, Binance achieved the status of the world's largest cryptocurrency platform by trading volume in just six months. However, it was only in May 2021 – almost four years later – that we reached the 50 million user mark. The next hundred million, going from 50 million to 150 million, took much less time and was reached in just 26 months, in June 2023. Then it took us less than a year to surpass the 200 million threshold.
Whenever I look at this curve, Everett Rogers' classic diffusion of innovation theory comes to mind. According to the theory, diffusion is the process by which an innovation is communicated over time among participants in a social system in a sequence of stages: knowledge, persuasion, decision, implementation and confirmation.
People progress through these stages at different rates, resulting in varying adoption times. Rogers categorizes adopters into five groups based on their readiness to embrace new technologies: innovators (approximately 2.5%), early adopters (13.5%), early majority (34%), late majority (34%), and laggards ( 16%). Innovators are early adopters and willing to take risks, followed by early adopters, who are often opinion leaders driving further adoption.
Even if all cryptocurrency users were Binance users (which is clearly not the case), 200 million people already represent a slightly larger share of the global population than 2.5%. In reality, we are much more than that. By all accounts, the innovators are already present, with early adopters joining the movement en masse and spreading the word as we move toward the early majority—whose advent, as some theorists have concluded, marks the beginning of mass or self-adoption. sustained. With such a steep curve, we might get there sooner than we think.
Co-optation or obsolescence
Historically, incumbents often disdained new technologies and the insurgents who promoted 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 strange novelty. However, the telephone's ability to provide instant voice communication soon demonstrated its value, leading to widespread adoption. Similarly, personal computers were initially viewed largely as toys for enthusiasts, with widespread skepticism about their usefulness. However, the rise of productivity software and the Internet has transformed PCs into essential tools for business and personal use.
In the current era, blockchain technology has 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 companies.
When a new technology proves 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 close. 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.
While there are still detractors, many of today's 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, leading the recent rush for spot bitcoin ETFs, 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 increase efficiency and security. Those who fail to adapt may face obsolescence as decentralized systems gain prominence. The current blockchain revolution mirrors past innovation cycles, 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 mix of co-option and competition as blockchain reshapes the financial landscape as well as countless other sectors. If the pace of growth in the Binance community is any indication, that future is about to come to fruition.