Adoption Rate of Cryptocurrencies: A blog discussing the adoption rate of cryptocurrencies.
Crypto Adoption is not growing as Bitcoin (BTC) or Ethereum (ETH) holders would hope. Most people are not interested in using digital currencies to buy products or services. While there are more than 1,000 digital assets, just a few have been used by many people around the world. If we compare the number of transactions per day on the Bitcoin network with other payment networks such as Visa or Mastercard, we can see that there was a growth in the last years, but it is still small when compared to these other networks.
In order for mass adoption to take place, digital currencies should be easy to use and to understand by normal people that do not have technical knowledge about them. There are several companies working in order to make this possible, but they have different approaches in terms of how they want to reach mainstream users.
Visa’s CEO Al Kelly said that if he had his way, every form of currency would become digital. He said that they see a “world moving from analog to digital and from cash to electronic forms of payments.” Kelly said:
“As more and more people become comfortable transacting digitally, and as
The adoption rate of cryptocurrencies is something we are very interested in at CoinFi. We’ve spent a lot of time thinking about what the adoption curve might look like and how it will affect the price of various cryptocurrencies.
For this post, we go back to basics and use the S-curve – which is commonly used in marketing to describe adoption over time – to explore how the cryptocurrency market might develop over time.
The S-curve is a type of graph that starts out slowly, accelerates, then levels off. It describes adoption for new products or technologies as they “cross the chasm” from early adopters into widespread use by the mainstream market.
At any given time, the value of a cryptocurrency is directly related to how many people own it and how many are using it. New owners increase the demand for a cryptocurrency, which increases its price. More users means more merchants accept the coin, which increases its utility in everyday transactions.
In this blog post, I will use data from CoinMarketCap.com to analyze the adoption rates of different cryptocurrencies. CoinMarketCap is a website that tracks the market capitalization of over 1000 cryptocurrencies. It also provides historical data on their ranking by market cap and other metrics.
There have been many different cryptocurrency adoption rate charts, but none of them truly capture the adoption rates in a way that makes sense. The most popular chart is the stock to flow model, which suggests that Bitcoin will be worth roughly $100,000 per coin by December 2021, based on current supply and inflation rate. This number seems high to me, but it’s not what I want to talk about. I want to talk about adoption.
Market cap is the first problem with how we understand this chart. Market cap assumes every unit of a currency has an equal value, which is not true. At the time of writing, there are roughly 19 million Bitcoins available (aka circulating supply), but only 10% of them are owned by the top 100 addresses. As a result, there are at least 190 million people who own less than 1 BTC (and many more who don’t own any). For example, if you take just the top 2 million addresses (roughly 10% of all Bitcoin addresses), then you have roughly 50% of all Bitcoins in existence. In other words, 50% of all Bitcoin addresses have less than 0.1 BTC each.
The price of a currency doesn’t matter when it comes to adoption – what matters is how much people use it for
As it stands, the crypto market cap is small. As an indicator, check out the results of a Google Trends search for Bitcoin and Ethereum. The search offers an interesting insight into how much of the world is aware of cryptocurrency, and what percentage are actually investing in it.
The two largest cryptocurrencies, Bitcoin and Ethereum, have achieved significant popularity and market penetration. This is reflected in their respective Google Trends scores, which show more interest than all other cryptocurrencies combined.
This suggests that there is still some way to go before cryptocurrencies become mainstream. But if you consider that most people probably haven’t heard of Bitcoin or Ethereum (let alone other cryptocurrencies), then perhaps this isn’t such a bad thing. It seems that there is still a lot of room for growth in this nascent industry.
A few years ago, it was not difficult to find someone who had never heard of Bitcoin. When I first heard about the cryptocurrency, I was intrigued and did a little research. The more I learned, the more fascinated I became. I began to tell everyone who would listen about this new technology and even bought a few people their first Bitcoin. Predictably, most people were skeptical and thought I was crazy for buying into what they assumed was a get-rich-quick scheme. A few months later, the price surged to over $1000 and suddenly my friends were much more interested in learning about Bitcoin and other cryptocurrencies.
This phenomenon is not unique to me or to Bitcoin. It seems that everyone who becomes involved with digital currencies goes through a similar journey from curiosity to skepticism to feverish excitement. The good news is that the pattern has continued long enough for us to identify three distinct stages: the early adopters, the early majority and the late majority.
The S Curve
One of the reasons we can predict these adoption rates so accurately is that they are part of a general pattern known as an S curve (also called an sigmoid curve). This pattern occurs in many naturally occurring phenomena as well as human inventions such as languages, writing systems and technologies. For example