October 25, 2022
Amberdata CEO and Co-founder, Shawn Douglass, recently contributed an article to the Cointelegraph Innovation Circle, a vetted organization of senior executives and crypto/blockchain experts. You can read the full article HERE or find it below.
Recent research indicates that if current trends continue, the number of crypto users worldwide will hit the one billion mark by 2030. With the global population in 2030 projected to be around 8.6 billion, approximately 11.6% of the worldwide population will be using crypto just twenty-one years after the first cryptocurrency was launched.
A study published by Boston Consulting Group (BCG), Bitget and Foresight Ventures, indicates that the amount of crypto users will increase significantly over the next seven years. Given that the number of users has been increasing rapidly in recent years, including doubling in the first half of 2021, the study's adoption projection may prove conservative.
In addition to rapid increases in adoption by retail investors, cryptocurrencies are also seeing rapid adoption by institutions. This will lead to significant increases in crypto allocations. The study indicates that crypto accounts for a mere 0.3% of total global wealth versus the 25% allocated to equities, leaving considerable room for growth.
A Blockware Intelligence report published in June offered a similar projection, estimating that roughly 10% of the population would adopt Bitcoin by 2030.
As risks such as regulatory uncertainty are resolved, capital allocations toward crypto should increase, possibly more rapidly than current user growth rates. According to the Boston Consulting Group (BCG)/Bitget/Foresight Ventures study, government funds, pension funds and corporations/banks allocated less than 0.01% of their total AUM to cryptocurrencies at the end of 2021, while individual investors have allocated 0.3%.
An increase to just 1% across these investor types would bring crypto's total market value to well over the $3 trillion peak seen in November 2021 — and that's before taking into account any increases in the valuations that would occur as a result of the increased investment.
While some governments have moved to ban crypto, others are working on developing regulations that will make the asset class more accessible to institutional investors, including the U.S. Many are also working on their own cryptocurrencies in the form of Central Bank Digital Currencies (CBDCs). Widespread adoption of CBDCs would transform financial systems while substantially increasing the number of crypto users.
Building the bridge between traditional finance and crypto is a critical path to increased adoption. Leaders in the crypto space can further institutional adoption (which flows down to retail adoption) by providing a similar infrastructure to what exists today on the traditional finance side. This means data, custody, reporting, regulation clarity, tax clarity, etc. Leaders in the crypto space can also work to bring some of the best of traditional finance to crypto. For example, trusted permissioned KYC/AML pools allow institutions to dip their toe in crypto in a way that aligns to their business.
If your firm is looking to capitalize on opportunities in this rapidly-growing asset class, you may not want to spend significant amounts of resources building every aspect in-house. Consider bringing in some professionals from outside your business to help work with aspects such as data, compliance or even development that could be better achieved with some outside, professional help. In fact, it's difficult to even recruit a team of experienced blockchain developers and data infrastructure experts from the current limited talent pool.
While the one billion user mark is largely symbolic, it is clear that the number of crypto users could grow significantly in the coming years as individuals and institutions become more familiar — and more comfortable — with digital assets. As adoption and transaction volumes grow, so will the amount of data and processes created. Thus, the amount of data and processes that will need to be ingested and analyzed to support research, trading, risk, analytics, reporting and compliance will increase as well.
