Mass Crypto Adoption: A Matter of When, Not If

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By Keegan Francis

The question is not whether global adoption of cryptocurrency will happen, but when it will. The exact chronology is difficult to pin down; mass adoption could take place in 2 years, 5 years, 10 years or more. However, the fact is that it will happen, and there are objective benefits to learning about cryptocurrency before mass adoption. Understanding cryptocurrency sooner rather than later can provide a smoother transition for all individuals. Much like early adopters of the internet, the first wave of cryptocurrency enthusiasts will have a head start on the second and third waves. So where exactly are we in the cryptocurrency adoption cycle? Are there analogies to the past that can give investors an indication of trends to capitalize on right now? Finally, how can we be so sure that mass adoption of cryptocurrency is inevitable, as so many claim?

“Gradually, then suddenly”

According to a recent study by Finder.com, approximately 27 million Americans own cryptocurrency, with 44.5% owning bitcoin. The percentage of Americans who own cryptocurrency has yet to reach 10% of the total population, but it has been steadily increasing since Bitcoin’s inception in 2009. Cryptocurrency adoption is much like the Adoption of any other technology: The rate at which adoption occurs grows very gradually to around 8-10%, then typically explodes upwards to mass adoption from there. We can characterize this general rate of adoption by the phrase “gradually, then suddenly”. Consider the adoption of the Internet in the 1990s as an anecdote. In 1990, only a handful of governments, universities, businesses and individuals used the Internet. But in the year 2000, everyone had to have a website. Similarly, smart phones were rare in 2007 when the iPhone was invented, but by 2011 everyone over the age of 12 carried the internet in their pocket.

We are still early for crypto

With that in mind, I think it’s safe to say that we’re still in the early days of cryptocurrency. Despite the massive valuations of bitcoin, ethereum, and a handful of other cryptocurrencies, the data suggests there is much more room for growth. With each passing year, we see new developments breaking out of space and capturing the minds and wallets of people around the world. NFTs have taken the Philippines by storm, and the Lightning Bitcoin network is used by Salvadorans for everyday transactions, for example.

CBDCs are on the horizon

Regardless of the future of cryptocurrency, governments are building their own digital currencies, called CBDCs (Central Bank Digital Currencies). While they may launch within the next decade, I suspect a certain amount of digital literacy will be required before they can be rolled out in mass. This further illustrates the benefit of educating yourself and your business about digital money today. Although cryptocurrencies and CBDCs probably work differently, many fundamentals may appear to be the same. For example, instead of withdrawing physical bills from your wallet, payments will likely be made using a digital wallet on your smartphone. Much like cryptocurrencies, independent fintech will be built around the CBDC, rather than within traditional financial institutions like banks.

Financial choice

As long as there are governments, there will be a demand for that nation’s currency. After all, taxes must be paid in the sovereign currency of that country. So while I argue that cryptocurrencies are the way of the future, I hesitate to assert that they will outright replace the USD and nations currencies, at least not anytime soon. I think the most likely and reasonable future is when people are faced with more choice in what currency they use to trade and store value. The currencies one chooses to use will dictate the level of financial opportunity to which he is exposed. The question at the table will no longer be “Which bank is yours?” but rather “what is your motto?”

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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