Why people don't adopt Bitcoin - they don't understand Expected Value

[tranthidung]

This is one of the reasons why Bitcoin adoption is so low.

Even it is low now, the adoption rate for Bitcoin is better than Internet adoption rate. If Internet can become big like nowadays, I expect to see bigger adoption for Bitcoin in next 10 years.

Everyone is aware of volatility, of big rallies and big crashes.

It is partially contributed by government-backed media attacks on Bitcoin. They don't want their citizens to be exposed with Bitcoin too much, they don't want their citizens use Bitcoin too much so they run shady, faked-news attacking campaigns against Bitcoin.

Avoiding big risks is the default course of action for most people, even if big risks have positive expected value.

They (governments and central banks) avoid to mention about risk of their fiat currencies.

• Purchasing power of the US. dollar over time.

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[hatshepsut93]

Therefore, I don't think that the fear of loss is the main reason why people don't want to invest in Bitcoin, because the reason can also be that someone simply doesn't have the money to afford any kind of investment, while others think that it's all a big scam which will collapse sooner or later. It should be kept in mind that public opinion is not shaped by this forum or a few more significant sources that provide information about Bitcoin, but by the mainstream media, which is mostly owned by those who want to preserve the system that allows them absolute control at all costs.

That's why I said it's a reason and not the reason, because the slowness of Bitcoin adoption is a complex issue. But I doubt that mainstream media is playing any serious role, because if you track mainstream news, you know that they only mention Bitcoin when there's big price action and they simply report it. And if you read some economic news and analysis, you can find a lot of pro-Bitcoin takes, because there are institutional investors who are invested in Bitcoin. And they don't view Bitcoin as a financial revolution, to them it's just an asset that brings investment opportunity.

[xSkylarx]

It is just that people are scared to take risks even if the profit they will gain is more. It is because the emotions of losing are bigger than winning, no matter how big it is. I think it's because of the reason behind that money, like how hard he earns it, like in bitcoin's slow adoption because people are scared of their hard-earned money to lose even though it could double or triple their investments. Though there are really a lot of factors to consider, if the people are just risk takers, then the possibility of gaining profit (same on video that they almost all win) is bigger than losing.

[Lucius]

That's why I said it's a reason and not the reason, because the slowness of Bitcoin adoption is a complex issue. But I doubt that mainstream media is playing any serious role, because if you track mainstream news, you know that they only mention Bitcoin when there's big price action and they simply report it. And if you read some economic news and analysis, you can find a lot of pro-Bitcoin takes, because there are institutional investors who are invested in Bitcoin. And they don't view Bitcoin as a financial revolution, to them it's just an asset that brings investment opportunity.

Maybe it's your way of seeing things, but I still wouldn't agree that the mainstream media doesn't influence the public perception of what the average person thinks about Bitcoin. It is not only what you will read in the last few months, but also what you will read in the past 5 years or more.

If you look at how much negativity has been created on the topic of Bitcoin mining with crazy claims that it consumes some kind of astronomical amount of energy, and the data from Q4 2022 shows that BTC mining consumes only 0.17% of the total world energy production. If you ask 100 random people what they think about it, I believe that more than 80% would say that Bitcoin mining is bad for the environment - and this is the result of the constant influence of most media on the subject.

It is similar to the public perception that Bitcoin is used for money laundering, terrorist financing, tax evasion, drug trafficking and a number of bad things. We know that the share of Bitcoin in this is very low, but those who claim the opposite will always use the story of Silk Road or something similar to try to prove the opposite.

[famososMuertos]

There is a wrong idea in handling this concept, but more due to ignorance of life than even learn academic it, many people apply this concept without knowing it.

In any case, there is no low or bad adoption, it is what is always sold, but the adoption is circulating, there is a preconceived idea that if someone (Group) says no, then the adoption is zero and it is appreciation wrong , there is no need to continue With this type of specific matrices, there is no need to worry about the degree of adoption. Bitcoin is the new color on the block, whoever doesn't see it, no problem.

[Picaflor]

The video talks about objectively favorable results. With Bitcoin the possible outcomes are unknown. Expected Value has little to do with this.

If you assume the BTCUSD price is going to infinity over the long term, the volatility is akin to the random outcomes of the coin tosses. The expected value is then objectively positive and increases with the passage of time (with the standard deviation decreasing), just like in a series of positive EV coin toss bets it increases with the number of rounds. So if you buy BTC now, it may be worth less tomorrow (a lost coin toss bet) but it's unlikely it will be worth less in 10 years.

Accepting a coin toss bet is a gamble (even a positive EV one, because you may still lose).
Accepting a series of 100 such EV+ bets is a DCA and hodl plan (you may still lose over the chosen timeframe, but less likely).

Both coin tosses and a Bitcoin hodl can be modeled by 1-dimensional random walks with probability skewed towards one side.

Ignoring trading fees, price going to infinity implies the EV of a BTC buy for a unit of time is positive (if it were negative, the price would be going to zero). So under the assumption of price going to infinity, and zero fees, the two stochastic processes can be reduced to each other. For the BTC side you may need to use a log scale if you believe the growth is exponential though, because for the coin tosses it's linear.

[aseev]

The video talks about objectively favorable results. With Bitcoin the possible outcomes are unknown. Expected Value has little to do with this.

If you assume the BTCUSD price is going to infinity over the long term, the volatility is akin to the random outcomes of the coin tosses. The expected value is then objectively positive and increases with the passage of time (with the standard deviation decreasing), just like in a series of positive EV coin toss bets it increases with the number of rounds. So if you buy BTC now, it may be worth less tomorrow (a lost coin toss bet) but it's unlikely it will be worth less in 10 years.

Accepting a coin toss bet is a gamble (even a positive EV one, because you may still lose).
Accepting a series of 100 such EV+ bets is a DCA and hodl plan (you may still lose over the chosen timeframe, but less likely).

Both coin tosses and a Bitcoin hodl can be modeled by 1-dimensional random walks with probability skewed towards one side.

Ignoring trading fees, price going to infinity implies the EV of a BTC buy for a unit of time is positive (if it were negative, the price would be going to zero). So under the assumption of price going to infinity, and zero fees, the two stochastic processes can be reduced to each other. For the BTC side you may need to use a log scale if you believe the growth is exponential though, because for the coin tosses it's linear.

There are objectively favorable conditions in the experiment in the video but there are no objectively favorable conditions in flipping a coin. It is 50/50 in the long run. But even if you ASSUME (although why would anyone assume that anything will go to infinity?) that the probability of tossing your coin skewed towards the favorable side, you use only two outcomes in your assumption - increase and decrease in value. You don't factor in other outcomes, such as those that could cause Bitcoin to cease to exist.

Instead of a coin, it may be better to use a die analogy with different sides that include additional outcomes like government intervention, overtaking by other cryptocurrencies, lack of decentralization, security breaches, technical issues, and the rise of quantum computing that will make cryptography obsolete.

[Picaflor]

There are objectively favorable conditions in the experiment in the video but there are no objectively favorable conditions in flipping a coin. It is 50/50 in the long run. But even if you ASSUME (although why would anyone assume that anything will go to infinity?) that the probability of tossing your coin skewed towards the favorable side, you use only two outcomes in your assumption - increase and decrease in value. You don't factor in other outcomes, such as those that could cause Bitcoin to cease to exist.

It's about EV. The favorable condition in the coin flipping game is when you pay $10 if you lose and earn more than $10 when you win, which is the game proposed later in the video and gives you a positive EV.

In terms of asymptotics there are only two possible outcomes for the BTC price, regardless of the factors that may drive it - it's either going to infinity or to zero.
By going to infinity I mean there is no positive real number x such that BTCUSD will never exceed x.

If it's neither going to infinity nor to zero, that means its USD price is going to range between some x and y forever, which would effectively be a peg against the USD. How could a finite supply asset be pegged against a fiat shipcoin forever? The USD would have to have a finite supply too, because the convertibility would have to work in both directions (otherwise there would be no market and therefore no valuation). The USD would have to be backed by Bitcoin. Not something I see happening in my wildest dreams, but even in that case, the purchasing power of BTC (but not its USD price) would go to infinity.

[Ryu_Ar1]

Actually, when you look at it at a glance, it looks like something that can be understood, but when you see the initial context of it, I think this can't be done when it's related to bitcoin.
Simply put, we are like betting and if we win we get $ 10 and if we lose then our bet is gone. The fact is that an approach like this to bitcoin is clearly not possible because apart from this it is not a gamble, we also cannot make promises as if bitcoin will be able to reach the price we set within a certain period of time.
The condition is that this is indeed another form of risk, but we cannot fix time and bitcoin in terms of value. Even though we are still sure that this will continue to develop, but when we talk about this to new people with a scheme like this, it is clear that they will reject it because they do not have basic knowledge about bitcoin and indeed this is at the risk of being impressed as burdensome because it returns to that knowledge alone.

[lionheart78]

First, check this video - https://www.youtube.com/watch?v=vBX-KulgJ1o, it's a social experiment where the guy offers random people on the street to take a bet where they have a decent advantage, and almost all people refuse it.

They have a decent advantage on the reward but the risk factor is the same.  There are still a possibility of losing $10 with the same amount of risk when they have to win only $10.  If the guy offers the person 3x chance to win the money, it is a clear advantage, and mght probably take the chance.

Why? Because they don't know math and can't calculate that the expected value of such bet is big and positive. Instead they are being guided by psychology - human mind feels negative emotions more strongly than the positive, and negative memories are stronger than the positive. Fear of losing is stronger than the desire to profit.

From a person's point of view, if he is not a gambler he will not take the chance no matter how huge the reward is.  You know we cannot apply risk management in this kind of game.  the chance is random and there is no sure way or advantage of winning on the said video.  It is still 50/50.  So we cannot use math to increase our chances to win.

This is one of the reasons why Bitcoin adoption is so low. Everyone is aware of volatility, of big rallies and big crashes. Avoiding big risks is the default course of action for most people, even if big risks have positive expected value.

People are afraid of uncertainties, but investors and traders do calculations and see the risk and rewards.  Besides Bitcoin and gambling as shown in the video are two different things.  Investment isn't gambling if we know what we are,  and why we are investing.  We can apply risk management in our Bitcoin venture, we can adjust and readjust to get what result we desired, while in gambling we cannot do anything once the die is cast.

[tjtonmoy]

The current generation is aware of Bitcoin and cryptocurrency. But what stops them mostly is legal issues. I had to stop accepting crypto payments after our government put a ban on cryptocurrency. I know people will still use crypto. Likewise, I do it too. But going publically accepting crypto is not a choice here. In a place like this where we can't even talk about crypto freely, how can we adopt them? Number of users are increasing daily, but no one is coming to the light out of the shadow. Because you will be in jail if you do so.

[yhiaali3]

Yes psychology is used to influence people negatively, I noticed they only pick out negative news when talking about Bitcoin but they don't mention the positives at all.

Some time ago, there was a clergyman warning about Bitcoin, and he mentioned the FTX incident in particular, and he mentioned how people lost millions of dollars, then he warned against using Bitcoin, as if Bitcoin was responsible for this incident.

Of course, Bitcoin is presented in this example as if It caused this incident to scare people away from Bitcoin. People (including the clergy) do not have any knowledge that Bitcoin has nothing to do with this incident at all.

[Bobrox]

Seems have little mistake with several responder in your video sharing link about why many people don't agree for adopting or investing in Bitcoin due crashing price and facing bad experience. I think psychology here most important and having good viewed with Bitcoin not only from bad news but also how looking on positive side with Bitcoin price growing up drastically under $1,000 and success break out all time high until $65,000.

I think have one reason about several respond give bad feedback with Bitcoin because your country still not have regulated with Bitcoin, I believe if Bitcoin have been legal currency many people get more positive side or news from Bitcoin and realize how profitable when investing in Bitcoin.

[Picaflor]

The current generation is aware of Bitcoin and cryptocurrency. But what stops them mostly is legal issues. I had to stop accepting crypto payments after our government put a ban on cryptocurrency. I know people will still use crypto. Likewise, I do it too. But going publically accepting crypto is not a choice here.

We can choose to stay out of the compliant economy, with registration, regulations and taxation, and build our own circular economy whereby we interact with friends, or interact anonymously and privately with a larger community of like-minded individuals. That way we won't have to worry about whether the forms of payment we accept are legal or not.
I believe that's the future. Not in changing the law, but in circumventing it by mastering and leveraging the technology that is at our disposal.

It won't be long before people have so much individual power (thanks to Bitcoin, cryptography, Nostr, Tor etc.) that our muppet governments will be a laughing stock at best.

[Japinat]

It is just that people are scared to take risks even if the profit they will gain is more. It is because the emotions of losing are bigger than winning, no matter how big it is. I think it's because of the reason behind that money, like how hard he earns it, like in bitcoin's slow adoption because people are scared of their hard-earned money to lose even though it could double or triple their investments. Though there are really a lot of factors to consider, if the people are just risk takers, then the possibility of gaining profit (same on video that they almost all win) is bigger than losing.

Other factor to consider is because some people doesn't have an open mindset to know new things besides from what they have already learn, some are not yet informed that there's a bitcoin existing on the market and some already know but afraid to put some risk on their funds and just choose to give their moneys to the bank to let it die. Personally, I had the same mindset because at least I know I have money on the bank sitting and waiting for me when will I touch it for future purposes, later on, I did learned that these funds will be wasted if I won't take advantage of it. Hence, why I'm on this forum and still learning about new things regarding the economy and cryptocurrencies.

[ethereumhunter]

Not many want to try an opportunity to be able to produce something bigger than they imagined. They tend not to dare to take risks and choose to do things they are used to doing before. As an investment, bitcoin can give them the opportunity to make a lot of money, but maybe people can't accept the risks, namely bitcoin price changes that are too fast, investment values are always changing or something else. Many persist with what they have done even though they have seen concrete evidence of bitcoin but it still doesn't interest them to accept something new.

[tjtonmoy]

The current generation is aware of Bitcoin and cryptocurrency. But what stops them mostly is legal issues. I had to stop accepting crypto payments after our government put a ban on cryptocurrency. I know people will still use crypto. Likewise, I do it too. But going publically accepting crypto is not a choice here.

We can choose to stay out of the compliant economy, with registration, regulations and taxation, and build our own circular economy whereby we interact with friends, or interact anonymously and privately with a larger community of like-minded individuals. That way we won't have to worry about whether the forms of payment we accept are legal or not.
I believe that's the future. Not in changing the law, but in circumventing it by mastering and leveraging the technology that is at our disposal.

It won't be long before people have so much individual power (thanks to Bitcoin, cryptography, Nostr, Tor etc.) that our muppet governments will be a laughing stock at best.

You have to consider public safety too. What if the powers go to some wrong person? Have you thought about that? We need somewhat control for government over legalization in order to track those individuals who will do wrong. Don't get me wrong here. I am not saying that it should be totally centralized. Government should have somewhat info of users IMO. That's how we can be sure that it is in safe hands.

[AmoreJaz]

Not many want to try an opportunity to be able to produce something bigger than they imagined. They tend not to dare to take risks and choose to do things they are used to doing before. As an investment, bitcoin can give them the opportunity to make a lot of money, but maybe people can't accept the risks, namely bitcoin price changes that are too fast, investment values are always changing or something else. Many persist with what they have done even though they have seen concrete evidence of bitcoin but it still doesn't interest them to accept something new.

 a lot are still blind when it comes to crypto market. what i mean here is that, they may have heard, seen, read about bitcoin or other crypto-related news, but the grasp of understanding it is still not there. definitely, if you have no knowledge about a certain thing, you don't want to take risk. hence, a lot are still preferring the traditional banking method and other payment methods. but once some of these people educate themselves what crypto or bitcoin is, they will slowly calm down and not against about it. it is only a matter of educating yourself about a certain matter to understand what's going on. if you don't know what's going on, surely, you wouldn't want to do anything about it.

[kamvreto]

Not many want to try an opportunity to be able to produce something bigger than they imagined. They tend not to dare to take risks and choose to do things they are used to doing before. As an investment, bitcoin can give them the opportunity to make a lot of money, but maybe people can't accept the risks, namely bitcoin price changes that are too fast, investment values are always changing or something else. Many persist with what they have done even though they have seen concrete evidence of bitcoin but it still doesn't interest them to accept something new.

 a lot are still blind when it comes to crypto market. what i mean here is that, they may have heard, seen, read about bitcoin or other crypto-related news, but the grasp of understanding it is still not there. definitely, if you have no knowledge about a certain thing, you don't want to take risk. hence, a lot are still preferring the traditional banking method and other payment methods. but once some of these people educate themselves what crypto or bitcoin is, they will slowly calm down and not against about it. it is only a matter of educating yourself about a certain matter to understand what's going on. if you don't know what's going on, surely, you wouldn't want to do anything about it.

Some ordinary people who still haven't studied bitcoin and cryptocurrency will of course only generalize that bitcoin and other crypto are the same, there is no difference. it is caused indeed due to a lack of knowledge about bitcoin and what benefits it will provide. They don't understand what the advantages of bitcoin are compared to other altcoins.
Due to the lack of understanding of bitcoin, many people still do not understand how bitcoin and other cryptocurrencies work, which makes them feel uncomfortable and distrustful of using them.
and also the price of Bitcoin and other cryptocurrencies is very volatile and can experience big changes in a short time, which makes people feel uncomfortable and distrustful of investing.

[Ndabagi01]

This is one of the reasons why Bitcoin adoption is so low. Everyone is aware of volatility, of big rallies and big crashes. Avoiding big risks is the default course of action for most people, even if big risks have positive expected value.

When it comes to psychology, you don't have to completely blame people for their actions. Many people will be discouraged from adopting bitcoin unless they have a deep understanding of blockchain decentralisation and how it works. People's minds often have complete control over how they perceive things, and they blindly follow their minds without questioning whether it is right or wrong to do so. Let the dissemination of accurate information about bitcoin continue; one day, we'll get there.