So what about crypto adoption rates in general? How powerful are the networks in this particular ecosystem, and how quickly are they growing? Well, we know that the rate of technology adoption has been steadily increasing full stop. And indications are, crypto may be outpacing them all. For example, this oft circulated chart from Global Macro Investor aims to visualise the adoption of cryptocurrency against the other biggest technology hitter of recent history, the internet.
As you can see, current growth in total crypto users is estimated to be outstripping the pace of growth we saw in internet users in its early days - and, in equivalent terms, puts crypto today at around the mark in internet adoption. And of course, we all know what has happened with the internet since then - good and bad. To put it into some sort of context using Bitcoin as the point of reference, observers have suggested that, whereas the internet took 7.
Quite aside from user adoption, we need to consider underlying use cases. Now in its early days, you could reasonably define crypto as a money trend. Bitcoin was developed as peer-to-peer electronic cash existing beyond the realm of government monetary policy - see our Bitcoin intro guide here for the full lowdown. The point being, a relatively narrow and self-contained focus on an open, decentralised, permissionless form of money.
Look at the landscape today and the situation is very different. Heading into , decentralised finance is a multi-billion dollar industry intro guide here. NFTs are a multi-billion dollar industry intro guide here. In short, the crypto ecosystem has expanded and continues to grow around decentralised applications as pioneered by Ethereum and an interlinking array of increasingly specific use cases. The same themes are still there - decentralisation, open systems, individual inclusion and empowerment - but the breadth and scope is on a completely new level.
And as builders continue to flood into the ecosystem, the use cases are limited only by our imagination. Various banks and wealth managers including JPMorgan, Morgan Stanley and Goldman Sachs, have rolled out funds offering crypto exposure - often at the request of their wealthy clients. And while the crypto markets remain volatile, cyclical, unpredictable and prone to bubble-like behaviour, what we can say for sure is that the scale of the numbers has changed, and that market access has widened.
At the same, market accessibility has greatly increased, with a wide range of popular apps bringing in crypto integrations, and the launch of the first bitcoin futures ETF in the U. When the hype runs high, it always pays to ask the fundamental questions… Do I see the evidence of adoption and growth?
Do I understand and value the problems the technology is aiming to solve? Do I see the possibility for long-term market appreciation? And as ever, those answers are highly nuanced and reliant on individual judgements and risk tolerance. Yes, we might be where the internet was in - but we know what happened with dot com companies around the millennium. Yes, there is an ever increasing array of use cases for crypto and blockchain technology - but many remain experimental, emerging visions for the future.
Yes, we are seeing unprecedented money flows in the crypto markets - but nobody can say how long it will last or how it will end. Ultimately buying into crypto means buying into a fundamental thesis - that decentralised systems can deliver solutions to problems that the existing system cannot; that usage and adoption will continue to grow as a result; that this technology can change the paradigm not just of finance, but of culture, ownership and the future of the internet itself.
Whether you believe that is a personal decision. In fact, it might just be the beginning. Curious to start your crypto journey and claim a stake in the blockchain future? Consider the U. A dollar is worthless in a vacuum—should the world collapse it can be used in a fire pit, or perhaps as toilet paper, but little else. Put another way: the dollar is only worth anything because we trust that it is, because the U.
Bitcoin, by contrast, is decentralized. Its form, its supply, and the mechanisms by which it operates were largely codified a decade ago by an anonymous individual or individuals who went MIA almost as soon as the network went public. The maintenance of the network is carried out by self-interested corporations and investors. In other words, Bitcoin may be a currency, yet it is the very antithesis of the U.
Some have suggested that, even though Bitcoin is not like a company, there are certain checklists in traditional equity investing which apply to it nonetheless. Does it lay out a coherent and sustainable plan for the long-term? How has it held up in the last decade—has everything gone to plan, and what might that indicate for the next decade? There are its core developers who maintain the code, individual nodes which provide security, and miners who process transactions.
All of these parties keep Bitcoin running. Is it a stretch, then, to analyze these parties in the way one would the management team or the employees of a traditional corporation? We might consider, for example, whether the core development team is competent, and what their rate of turnover is. We might consider the number of full nodes in the network and ask: does Bitcoin have enough people to ensure its security? We can look at mining pools to determine whether their centralization could threaten network performance in the future.
All of these are worthwhile factors to consider when determining the intrinsic value of Bitcoin. Yet none suffice to explain the most fundamental, most crucial question of all:. In contrast, humans have traded with currencies for millennia , without any need for Bitcoin. How can we be sure that people will still want to own Bitcoin 5, 10 or years down the line?
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.
Completely non-reversible transactions are not really possible. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.
Bitcoin would take the power from banks which, just a couple years prior, had proven themselves very untrustworthy , and put it back in the hands of individuals. It would mean less hassle and more privacy in financial transacting, and better protection against fraud. Remarkably, all these years later, Bitcoin has come through on its promises.
Anybody can buy Bitcoin anonymously right now, from anywhere in the world, so long as they have a computer with an internet connection. While many people choose to trust in third-party companies, nobody has to: you can have complete, guaranteed ownership over your investment. And, most remarkable of all: Bitcoin has proven more secure than any other asset in existence.
It is infinitely easier to break into the Pentagon , for example, than it is to steal Bitcoin from a responsible investor. Even if Bitcoin has proven everything it set out to prove, does that necessarily mean that it is valuable for the reasons its founder thought it would be? This is a subtle but important distinction. Another subtle yet important distinction. Most Bitcoin transactions today are made in an investment context: buying and selling, as one would with corporate stocks or gold.
They turned out to be wrong. People sometimes send crypto to friends and colleagues, but not nearly to the level they use Venmo or Paypal, for example. Outside the immediate crypto ecosystem, few conventional businesses accept Bitcoin as payment.
Even then, only in limited capacities. There are various technical hurdles that might have contributed to why Bitcoin never took off as a payment mechanism: the difficulty in accessing and securely transacting crypto on the go, for instance, and the fact that crypto is still too technical for most people to grasp.
Everybody with some full-gold and some half-gold coins will do the same, hence the pure coins will be hoarded and the cheaper will circulate. Bad money drives out good. Which are you more likely to spend? Thus, it is a contradiction to invest in Bitcoin and also use it to pay for things. Unlike a can of coke, it has no property here, refreshment that is valuable to a human being in and of itself. And unlike the U. But this is a kind of house of cards, right?
What happens if, eventually, enough people stop believing that the price will go up? In such a scenario, there is no supporting reason to hodl. For a community that values trustlessness, it can be a scary prospect: Bitcoin only has any value as long as we trust that other people value it as much or more than they do now.
Even government currency, trust-based as it is, is highly useful—necessary, in fact, to the function of a modern society. That BTC recently jumped to multiples of where its price was just a few months ago is seen as evidence, by bulls, that the world is finally catching on to its value. Fair enough. But is this belief based on objective fundamentals—properties of Bitcoin itself—or more subjective factors like general sentiment , or past behavior as a predictor for future performance something tradfinance disproves time and again on broad-enough timescales?
A good exercise here would be to try and calculate a specific valuation for what Bitcoin should cost, and why. The simple act of doing this mental exercise will help you narrow down your reasons for valuing Bitcoin, and the precise not vague, not optimistic degree to which you do. Much of the discourse today, particularly in light of the COVID economy, surrounds Bitcoin as a hedge against more traditional assets , and currency inflation and debasement.
Some of the more popular lines of reasoning go like this:. Plenty of these arguments are well-founded and compelling. At least for the near-term, they may well bear out.
If you've considered investing in cryptocurrency in the past, it may seem like it's too late to buy now that prices have fallen so significantly. However. huge.crptocurrencyupdates.com › investing › /01/25 › is-it-too-late-to-invest-in-crypto. Bitcoin has been one of the best financial assets to own over the past several years, so you might think that you're late to the party. But.