People the world over know about cryptocurrencies like Bitcoin & Ether, but they still don’t understand them.
Variations of “What is Bitcoin?” are still common questions most of us in the industry face daily. And they are questions I’m more than happy to answer every time.
One afternoon I had a phone call with someone we will call Laura. About 5 minutes into the conversation she stopped me and said; “Can you just break Bitcoin down for me? What exactly is going on there?” – I proceeded to give Laura a quick explanation of Bitcoin, and she got it immediately.
Outside My Blockchain Bubble
Over the last few years as blockchain and decentralized tech (not just Bitcoin) came online, I jumped in and began to live in a bubble. Working with Bitcoin, Ethereum and other cryptocurrencies meant attending conferences, gatherings and a multitude of meetings with developers, investors and enthusiasts who loved what was going on. It didn’t take very long for me to believe that everyone understood the value of decentralized networks, applications and global digital currency.
Soon enough we were building digital wallet technology. It was a no-brainer. EVERYONE needed a better wallet for their Bitcoin, right? WRONG. When I took a step back with our team, I realized that I was only traveling to the places with self-selecting populations who already understood cryptocurrency. When we started actually paying attention to non-enthusiasts, it became apparent that we still have a long way to go.
Traveling the World, Looking for Bitcoin
Global adoption of Bitcoin is still low. At BlockFS in NY last November Tom Jessop, President of Fidelity Digital Assets, said that global cryptocurrency adoption is at a meager 0.48%. Only 14 million Bitcoin wallets are holding over $1 in value today. Before the boom and bust in 2017, just 6 million wallets were assessed as active by the University of Cambridge.
By looking at centralized services such as Coinbase, (who consolidate wallets into accounts) and factoring in the 2017 cycle. It's possible to arrive at 50 million to 80 million global users of cryptocurrency. Even with 80 million users, that would still leave worldwide cryptocurrency adoption at a rate below 0.48%.
The global population is roughly 7.7 billion, at the time of this writing. If we are talking about anything else — from high-end electronics to British pubs – we can narrow the number of people in the addressable market significantly.
Cryptocurrency is a fundamentally new global economic and financial system. To put true market adoption in context we must view crypto use within the global population old enough to engage in commerce. This means the potential market for cryptocurrency is enormous and largely untapped.
Past the Bitcoin Headlines
The most popular figures that make our headlines today are the significant wins and losses produced in the market. With a $113 billion market cap as a whole, even casual participants might think there are far more people involved than there are in reality. The cryptocurrency bubble in 2017 and Ripple’s 36,000% gain, followed by 2018’s crash and Bitcoin‘s 70%+ fall, are legendary at this point.
Pundits called Bitcoin another pets.com. Bubbles in new markets, whether it be tulipsor the internet, are nothing new for us. Viewing cryptocurrency from that perspective makes its potential clear now that we’re on this side of the hype cycle.
It will take time for cryptocurrency to realize its true potential. Currently public perception of the technology is steeped in misinformation and slanted towards sensationalism. Engineering frameworks and systems that make the technology accessible to everyone are still lacking. These factors will have to change for cryptocurrency to take the spotlight.
As we’ve seen with the internet, when useful and innovative technologies become widely accessible, they flourish. Once people have the tools that make cryptocurrency accessible, adoption will grow rapidly. When this happens, cryptocurrency won't just be a speculative investment, but a novel technology that touches billions of people.
Header image by BitCongress