Thoughts on Stellar’s Randos Per Week in the context of increased crypto awareness
In their “Stellar 2018 Roadmap” (see Thoughts on “Stellar 2018 Roadmap”) Stellar jokingly (at least I hope so) shared the critical indicator for a decentralized protocol” (original emphasis), namely randos per week (r.p.w or rpw; number of random people talking about crypto) and promised equally moonish growth.
Although meant as a joke there is some truth in those numbers. The number of average — „non-crypto“ — people talking about it has — at least in my perception — increased in the last couple of weeks and months. More importantly, such popularity metrics are important for the diffusion of cryptoassets; the more people know about it, the greater the likelihood of acceptance. Nevertheless, the recently increased popularity of crypto is not without its caveats.
- Prevalence of common misconceptions hindering diffusion: Firstly, a lot of the attention is still on getting rich, Crypto being a bubble and people confusing all alts with Bitcoin. As long as these misconceptions prevail, crypto won’t reach mass market adoption.
- Creation of overhyped interest leading to bursting bubble: On the one side Blockchain and Co. are overhyped to be the next big thing and if possible right now. On the other side, adoption is either low or not perceived because it is happening under the hood. For instance, Stellar’s partnership with Tempo (see Thoughts on “Stellar and the State of Cryptocurrency”) is one example of a Blockchain implementation of which the end-consumer might never be aware of. This imbalance of promises and perceived results, especially given the opposing time horizons, will burst the bubble. However, this burst won’t be only a financial one but also one of media, corporate, and entrepreneurial interest. Where we go from there will be extremely interesting.
- Availability heuristic leading to wrong conclusions: It seems that with “randos” Christian is referring to individuals. Even if his reference was meant as a joke, I believe we can agree that there are lots of individuals concerned with crypto. As a consequence, crypto is interpreted to be on everyone’s lips. The next common conclusion is that crypto has finally arrived and that is has become indispensable. Whereas both conclusions might be true, I question both premises.
Firstly, crypto is certainly not on everyone’s lips, it is only on those people’s lips who talk about it. In other words, those who do not know about crypto don’t talk about their nescience, but those who know, talk. And those “crypto people”, although very active and highly present, are still in a minority. Such a deduction from a small, attention-attracting and easily perceivable minority is at the essence of availability heuristic, the bias that makes one judge a topic based on what is immediately recallable. As various examples have shown, such a mental shortcut must be treated with caution and crypto is no exception. The second above-mentioned argument — crypto “has become an indispensable” because it is “interpreted to be on everyone’s lips” —is based on the logic of path-dependence or lock-in. Path-dependence or lock-in explains the persistence of many today’s products and might one day for crypto as well. However, based on the fact that for the most part — people are only talking about it (and — as stated above — only a loud minority) such arguments must be treated with caution as well.