Disruptive innovation is where a new market network and value network are created that disrupts an existing market and value network that displaces existing monopolies in the respective sectors in services products and even alliances.
A good example is the dawning of the new age of the internet, which disrupted the previous forms of business conductions by firms and negated businesses that were not ready to adopt it in their business enterprises. The financial sector has been sabotaged by such innovations that have come in the form of the current rapidly growing cryptocurrencies.
Bitcoin as a disruptive innovation
Bitcoin, the largest cryptocurrency in market size is barely 15 years old and has 18 million+ coins in circulation with a market value of $160.4 billion. The dawn of various other sister currencies of similar form continues to pose a threat to the financial markets as we see them. Consumer preference of the cryptocurrencies sees that leveraging its benefits against the negatives lean on the positive which continues to rise in popularity.
Adoption of the Blockchain technology by the cryptocurrencies provides a whole new idea of decentralization that physical monies lack. This is provided by a large number of interconnected nodes on the network that all collectively are used to provided verifications of blocks with no actual centralized nodes to which the currency is dependent. Confidentiality that is seen in this form of currency is also another upside factor that is causing a steady increase in the number of transactions and account holders.
Why cryptocurrencies are a disruptive innovation
Now, why do we define this as a financial disruption innovation? Cryptocurrencies have designed an entire market for its users. Though it largely preserves the basic functions of hard currency, its value proposition proves significantly better than that of money. Now, this puts this currency at a higher value and tracts a lot of markets that adopt it as a safer haven based on the benefits it offers.
Increased usability of this form of currency continues to blanket previously hard cash dominated spaces that de-market the latter. Most essential services and online sale platforms continue to accept the use of Bitcoins that shows how these markets continue to embrace the change.
The innovation on the industry continues to see its more upward trend as it continues to gain popularity innovation continues to exist and may experience and establish a tremendous monopoly in the future if the government caps do not hurt its growth. Other disruptive innovations exist and follow the very same principles.