The water lily analogy has its stem in The Slight Edgean excellent book I would recommend to anyone. The premise is that even a doubling of progress leads to only marginal improvements in the beginning. The water lily doubles its covering of a pond for many days in a row, and for many days in a row the progress does not seem great. Then the lily reaches the breakout point and within a few days it goes from covering only a corner of the pond, to all of it. A comparison to Bitcoin, and more broadly the entire crypto ecosystem, is imminent. Forget about a price for a moment, when you focus on the fundamentals you can see the growth.

  • In Hong Kong, for instance, we just witnessed more trading on Local Bitcoins than at the height of the previous bull market.
  • Record levels of Bitcoin trading in countries like Argentina and Turkey.
  • The amount of money locked up in DeFi has doubled since the beginning of the year.
  • And so forth… Crypto is clearly growing, but how long might it take?

Doubling Our Way to Mass Adoption

Let’s say, generously, that there are a million active Bitcoin addresses. If you double that to two million it’s still 0.03% of the world’s population. Insignificant. Double it to four million and now it’s 0.06%. A bit better, sure, but still just the guts of a splattered fly on the economy’s windshield.

So Bitcoin doubles for years and the progress seems slight, few pay much attention. But what most don’t realize is that Bitcoin is a water lily, moving inexorably towards the breakout. Speaking practically, the way I see this happening is word of mouth. If one person in Argentina tells their friend about Bitcoin and that friend creates a wallet and acquires some, Bitcoin usage has doubled (in regards to our micro-example). Now imagine both those people convince a person to get some coin. We’ve gone from two to four. And then… You see where this is going. The doubling effect of people convincing other people, this is where the power of a movement makes itself seen. It will get easier over time.

When you just have one crackpot friend telling you to buy magic internet money it’s easy to ignore them. When half the people you know are buying Bitcoin the temptation to jump in will be much stronger. That tipping point, the accelerating network effect the world over, is how Bitcoin could make its mark on the world.

Tl;dr – Focus on the fundamentals. Things (like Bitcoin) can double in usage/adoption/price/public perception for a long, long time without making much impact. However, once the tipping point is reached just a few more doubling events can lead to massive, disproportionate progress.