Thinking That Crypto Won’t Catch On? Why It’s Too Early to Make That Call!

Have you ever heard remarks that crypto is dead, or that crypto is interesting but hasn’t caught on? Or, maybe you’ve thought to yourself ‘I wish I had gotten into crypto earlier!’ and find yourself wondering if there’s still time. This blog is for you. Please read on as we compare crypto and the previous globally disruptive technology - the internet - and you’ll see that it’s still early. 

Crypto has the potential to, at least, partially subsume asset classes including existing stores of value such as gold; and existing financial institutions. Therefore, it is relevant to understand the speed at which finance and global currencies evolved as you continue to explore adding crypto to your wealth management plan.

Crypto Compared to the Internet

Crypto and the internet share several traits. 

First, both run on distributed networks. The internet allows for the free flow of information, whereas crypto allows for the transfer of value without the need for a central authority by leveraging blockchain technology. Additionally, both crypto and the internet are global in scope. The internet has connected people and businesses around the world, allowing for the exchange of information and ideas. Similarly, crypto allows for the transfer of value across borders without the need for intermediaries, such as banks or payment processors.

Both crypto and the internet have the potential to disrupt traditional industries. The internet has disrupted many industries–from media to retail–by providing new ways to connect and transact with customers. Similarly, crypto has the potential to disrupt traditional finance by providing a new way to store and transfer value, including self-custody and peer-to-peer transfer mechanisms.

Both crypto and the internet have faced regulatory challenges. The internet faced regulatory challenges in its early days, with governments and industries struggling to understand and regulate the new technology. Crypto currently faces regulatory challenges in many countries, especially the US, with some governments seeking to ban or restrict the use of cryptocurrencies.

Overall, crypto and the internet are groundbreaking technologies that have the potential to reshape many aspects of our lives, and both have faced similar challenges in their early stages of development.

Adoption Curve

So, where are we in the adoption of crypto? The typical, generic adoption curve of new technologies looks like the graph below with the red line showing new users, and the blue line showing percent of market share captured.

Adoption curve of new technology

Now let’s compare overall crypto adoption with the adoption of the internet by overlaying total internet users from 1990 to 2000 on top of total crypto users from 2014 to 2024. That is two years into the future from when the graph below was created.

Internet vs crypto adoption

We can see that total crypto users are on the same trajectory as total internet users across the aforementioned timeframes. 

We can also look at this through the lens of comparing the Bitcoin (BTC) price to internet adoption rates. Comparing Internet adoption rates to the price of BTC from 1994-2018 and 2010-2035, respectively, we can see that the BTC price is tracking the adoption rates of the internet as shown in the graph below.

Bitcoin price compared to internet adoption rate

Evolution of Global Finance

To evaluate the maturity of Bitcoin and cryptocurrency, we should take a step back to understand the evolution of global currency since Bitcoin and other crypto currencies are, after all, digital currencies. 

Although the Lydians of ancient Greece used coins during the 7th century BCE, the Spanish dollar is known as the first global currency used for international trade during 16th century CE. Then, in the 19th century the British pound sterling dominated international trade due to the strength of the British Empire and its economy. Following World War II, the Bretton Woods system emerged which pegged currencies of 44 nations to the US dollar, and all US dollars in circulation could be exchanged for gold at a fixed price of $35 per ounce. This was known as the gold standard. 

As 1971 drew closer, unfortunately the payment deficits between the United States and other nations continued to grow along with the dollar supply, ultimately leading to the abandonment of the gold standard in 1971. Since leaving the gold standard, the US continued to run a cumulative net negative balance with international trade partners, as shown in the chart below.

US current account balance, in millions of dollars

Today, the US dollar remains the dominant global currency, accounting for over 60% of global foreign exchange reserves. However, the ever increasing adoption of cryptocurrencies may lead to new forms of global currency in the future.

The evolution of finance plays out over centuries, and modern finance has been playing out over the last decades and will continue to do so. The Bitcoin network launched in 2009 and Ethereum in 2015 - It’s still early!