Bezos and Crypto: Changing the Data Business Model (Part 2 )

Bezos and Crypto: Changing the Data Business Model (Part 1)

Bezos and Crypto: Changing the Data Business Model (Part 3)

Last week, we shared some of our thoughts around Jeff Bezos’ insight into the early advantages of the internet and how those principles apply to cryptocurrencies and data business models.

This week, we pick up on another key principle Bezos’ discusses about the decision to start Amazon: growth. The growth we are talking about here isn’t at a company level, i.e. total customers, revenue, click-throughs, and so forth. Rather, its a more global, macro perspective that looks at how big a new technology might become.

In 1994, when Jeff Bezos was considering starting a company that would sell books over the internet, he wasn’t preoccupied with how many people currently buy books online (the answer would have been zero). He may have had a notional idea of how big the market for online book sales could be, but the more fundamental data point that intrigued him was the internet and it’s potential. And specifically, the growth rate of the internet — which he approximates was roughly 2300% annually in 1994 (was around 16 million people in 1995).

Here is Bezos in his own words:

While Bitcoin is certainly not the internet — since one is connecting to network of information and the other is a decentralized and distributed ledger — we think Bezos’ focus on core technology growth is a good one and useful in assessing new technology adoption. This also allows us to logically compare and contrast it to other technological advances such as the internet and its adoption.

We could just show this chart of Bitcoin from its inception to current day with its elegant linear hockey stick growth and move on:

But that isn’ really the full story of Bitcoin’s growth and likely wouldn’t pass Jeff Bezos’ muster. We need to drill down a bit more.

First, we look at market capitalization. When we look at Bitcoin growth in terms of market capitalization over the past year, we see roughly 57% annual growth:

Good. But not 2300%. Of course, cryptocurrency is really just getting started in many respects. The story of Bitcoin and crypto goes back further than the past year of course. So looking at where the Bitcoin market cap is now from where it was two years ago, we see a more impressive 1077% growth rate: