{"id":5850,"date":"2020-07-21T12:09:43","date_gmt":"2020-07-21T16:09:43","guid":{"rendered":"https:\/\/cointelegraph.com\/magazine\/?p=5850"},"modified":"2020-07-21T12:09:43","modified_gmt":"2020-07-21T16:09:43","slug":"aligned-incentives-accelerating-passive-crypto-adoption","status":"publish","type":"post","link":"https:\/\/cointelegraph.com\/magazine\/2020\/07\/21\/aligned-incentives-accelerating-passive-crypto-adoption","title":{"rendered":"Aligned Incentives: Accelerating Passive Crypto Adoption"},"content":{"rendered":"

Ask any politician, parent, or social scientist: getting people to change their behavior is hard.<\/strong> The default setting is business as usual, carry on doing things the way we\u2019ve always done them. And changing that takes directional applied effort \u2014 Newton wasn\u2019t wrong.<\/span><\/p>\n

The more entrenched the original behavior, the more difficult it is to shift people out of it. And it can take a combination of different influences to trigger the transition, to push people along the adoption curve \u2014 which is also known as the <\/span>Technology Adoption Lifecycle, or the Diffusion of Innovations, which was originally described in the 1960s.\u00a0<\/span><\/p>\n

\"Technology<\/p>\n

Technology Adoption Bell-Curve (Rogers 2003)<\/span><\/i><\/p>\n

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This model describes how new ideas and practices catch on, led by small numbers of innovators, then early adopters who follow them. Subsequently, the trend grows in volume to fill out the bell curve, with early and late majority at the center of it, followed by laggards trailing down to infinity on the other side.<\/span><\/p>\n

It\u2019s a powerful visual, not least because the curve reflects the effort level involved for those trying to drive change \u2014 it\u2019s steepest when you\u2019re trying to build momentum and bring the masses in behind the early adopters. Once you get past half way, it\u2019s an easier, gravity-assisted ride down the other side (if you consider network effects to be a reasonable parallel for gravity).\u00a0<\/span><\/p>\n

Different people find their comfort zone on this curve depending on internal factors to a large extent \u2014 personal risk profile, attitude to change, and so on. But it is inevitably acted on by external events too, even if we think we\u2019re deciding for ourselves.<\/span><\/p>\n

Take working remotely, which was still very much in the early adopter phase until the beginning of this year even though the tech was all in place and the curve was starting to shift.<\/span><\/p>\n

The promise of greater autonomy, productivity, and saved time and money wasn\u2019t enough to encourage most people to try working from home \u2014 but the threat of a lethal pandemic was, not to mention the ability to keep working and earning money at all. Once people had no choice but to work from home, suddenly, the incentives were aligned like never before.<\/span><\/p>\n

Notwithstanding the resistance that characterizes the laggard end of the adoption curve, there are large numbers of people and employers who now see this way of working as a long-term part of their \u2018new normality\u2019, with far-reaching consequences for business, travel, communities and beyond.\u00a0<\/span><\/p>\n

So, what about incentives to adopt cryptocurrency?<\/span><\/p>\n

Diffusion and adoption of cryptocurrency<\/span><\/h4>\n

Bitcoin has been with us for over a decade, but most people would argue that we are still very much in the innovator phase. Right now there are a range of factors nudging new uptake, from what appears to be an imminent global economic crisis to a growing set of products and tools with improved user interfaces and ease of use.<\/span><\/p>\n

The earliest innovators are motivated by the technology and the vision, and some can be quite disdainful of financial motives. But we\u2019re hovering at the bottom of the steepest part of the curve still, and most people need incentives to get on board.\u00a0<\/span><\/p>\n

Aubrey Strobel is Head of Communications at Lolli, a platform rewarding online shoppers with Bitcoin on a wide range of sites presently oriented at U.S. consumers:<\/span><\/p>\n

\u201cLolli is for a lot of people their first Bitcoin wallet, the first time that they\u2019re owning Bitcoin. And it’s a very easy on-ramp for them because they\u2019re not changing any behaviors, they\u2019re just shopping online, and so long as they click to activate our browser extension, they\u2019re passively earning Bitcoin on purchases they would have made anyway.\u201d<\/span><\/p>\n

Stacking sats without trying<\/span><\/h4>\n

Passive is surely good, when it comes to changing behavior. Smoothing away friction, with the Lolli extension running in the browser, means that people don\u2019t have to create new accounts to use it at each retailer \u2014 it takes just one click to opt it in when they arrive at the site.<\/span><\/p>\n

\u201cMost people will never (now) learn to mine Bitcoin. And it\u2019s still a low proportion that will ever go on an exchange and be their own bank \u2014 most people wouldn’t even know how to buy a stock\u201d, Strobel explained. \u201cMore might buy somewhere like Coinbase, then try to figure out how to move and store it safely, but with Lolli people just accumulate Bitcoin without trying.\u201d\u00a0<\/span><\/p>\n

This should mean that more people are motivated to then learn about storage and what to do with the satoshis (or sats, the smallest fractional unit of a Bitcoin) they have stacked once they\u2019ve acquired them. Strobel recognizes this as the next thing the platform needs to provide. \u201cActually a very low percentage of people are cashing out, so we need to teach them how to hold their money. We want to partner with a few wallets, and the next step is to teach people how to properly manage their assets.<\/span><\/p>\n

\u201cWe\u2019re doing this through our blog, quick bits of content that explain Bitcoin, and its positives and negatives. We\u2019re coming up on our second anniversary in August, so I think it’s time for people to start moving and owning their balances, especially if they\u2019ve accumulated quite a bit.\u201d<\/span><\/p>\n

So it\u2019s all about incentive. Learning about self-custody and storage might feel like a step too far up the learning curve when it\u2019s all theoretical, but when you\u2019ve actually got some Bitcoin of your own to manage, you have some motivation to hang on to it safely.\u00a0<\/span><\/p>\n

This leverages the well-known cognitive bias of loss aversion, which dictates that we\u2019re far more reluctant to let go of (or take risks with) what we have, compared to intangibles and theoretical benefits.<\/span><\/p>\n

Incentivizing positive action<\/span><\/h4>\n

Another startup, a bootstrapped international collaboration called sMiles, aims to go one step further in behavioral nudging by encouraging pro-social activities in exchange for crypto, rewarding actions like walking and running \u2014 and even driving, for smaller rewards. Still in beta, sMiles (\u201csats for miles\u201d) also incentivizes viewing of ads and playing games to encourage users to accumulate sats and fund the development of the app.<\/span><\/p>\n

Founder Igor Berezovsky has been interested in monetizing attention and healthy behavior for years, but it\u2019s only the combination of tracking technology like motion sensors in smartphones and smartwatches, combined with the existence of Bitcoin and the lightning network, which makes it possible. And while the rewards are small, it\u2019s the promise of appreciation in a hyper-bitcoinized future which offers intriguing promise.<\/span><\/p>\n

As Berezovsky said, \u201cIf I am going to buy some Nike shoes for $100, and a company offers me $2.00 cash back, that\u2019s not going to change my life. But if the possibility of hyperbitcoinization is there, you could say that in eight years you effectively got those shoes for free. Even if it’s a low probability, this basically makes Bitcoin and sats the best possible tool for incentivizing people now.\u201d\u00a0<\/span><\/p>\n

At least for incentivizing people with a long time horizon, who would have r<\/a><\/span>esisted the marshmallow <\/span><\/a>with their eye on the greater prize.<\/span><\/p>\n

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