With little to go until the last quarter of the year, it can be said that 2021 will be remembered as a crucial stage in the adoption of crypto assets. And it is not only about the growth of the usability of these currencies, but about their attached technology, the Blockchain.
For him exchange Most important in the world, Binance, 2021 is the turning point between the before and after for the use of digital currencies. Despite this, he considers that the number of people who have some relationship with these currencies is extremely small compared to the world population.
In this sense, he explains that the adoption of a new technology generally goes through 5 stages. Thus, Bitcoin and digital currencies in general, crossed the border from the first to the second stage during 2021. In other words, this technology is just taking its first steps. The next few years will be crucial for investors in these early stages.
Where is the adoption of crypto assets headed?
It is no longer a matter of optimism to affirm that the adoption of crypto assets is inescapably heading towards massification. It is a consideration a few years ago only the most staunch enthusiasts of these assets repeated like a mantra. Now, anyone moderately informed about economic issues will not hesitate to admit it.
This is because the results are in plain sight. According to data collected by major portals, the usability of cryptocurrencies is increasing rapidly. Thus, by May 2020, a survey indicated that the number of users took 9 months to rise from 65 million to 100 million. Now, in 7 months, this number has increased from 100 to 300 million. This last figure corresponds to the Binance.com portal.
With this increase in users in recent months, the usability of digital currencies would have reached 3.8% of the world population. This is an important advance for the sector, especially considering the setbacks suffered by the crypto market for much of this year.
One of the biggest problems was related to that of the mining industry. The business was accused of polluting and from several fronts it received harsh criticism, which negatively influenced the use of cryptocurrencies. But the worst of the blows came from China, when that nation that owns most of the hashrate within its borders, decided to ban the activity completely.
The stages of adopting a technology
As already highlighted, 3.8% of the world population using Bitcoin and other altcoins, is a minimum number for a financial technology. That being the case, what is the importance of 2021 to qualify as a turning year for these digital assets?
The answer to this question is that crypto assets and Blockchain technology as a whole have passed the first stage of adoption. According to the publication of Binance, the journey of a technology towards its massive usability, goes through 5 stages.
The first of these stages is the one where the ceiling is 2.5% of the people who use the technology. This is the stage of the innovators or pioneers (Innovators). Next, comes the stage of the first users (Early adopters), which ranges from 2.6% to 13.5% of users globally.
By passing this last barrier, the two phases of the majority in when to the use of cryptocurrencies arrive. This is the Early Majority or Early Majority (up to 34%) and the Late Majority or Late Majority with 35% onwards. Upon reaching 50%, it becomes a technology Mainstream which is the fifth and last stage.
This last stage is equivalent to 3.5 billion. To show the context, Binance compares data from some of the tech giants. For example, Google has 4 billion users and Facebook about 3 billion. This is, after all, the approximate goal of cryptocurrencies.
What determines the growth of the rhythm in the use of digital currencies?
There are many factors that pushed millions of people around the world towards the adoption of crypto assets. Listing them all is not an easy task considering the contexts, realities and behaviors of people in different parts of the world. But there is a group of factors that can be considered the main ones:
- The rise in price of Bitcoin: The arrival of the pandemic in 2020 hit the entire market hard, including Bitcoin, which reached 4K. However, his recovery was fast and by the end of the year he was reaching 20K. In the midst of that rise, the DeFi phenomenon came to life. 2021 was an extension to which the NFT boom was added. All this could not go unnoticed, which attracted millions of people.
- Institutional adoption: The boom itself made a large number of important investors not want to miss out on the profits from these assets. Traditional companies like MicroStrategy and then Square and Tesla announced their possession of Bitcoin. Then Wall Street started taking cryptocurrencies seriously.
- The pandemic, crisis and inflation: The global economic crisis, caused by the pandemic, exacerbated existing problems such as unemployment. Likewise, inflation increased its damage against people’s income. Cryptocurrencies began to be seen as a haven of value in the face of loss of purchasing power. Also, unemployed people began to veer towards these assets and telecommuting reported another major boom in the adoption of crypto assets.
The use of stable coins
A fourth factor in the rapid growth experienced by the number of people in the crypto market is the use of stablecoins. They became a bridge between traditional money and cryptocurrencies. For people fearful of the volatility of Bitcoin, having their funds in USDC, USDT or BUSDT among others, represents a relief.
On the other hand, in some countries access to dollars is complex for many reasons. Both in cash and on digital platforms, it is complex to handle the US currency. Among these obstacles, the high commissions in PayPal, Skrill and other portals stand out. Likewise, in many countries accessing the cash it involves going to the black market.
To access the stablecoins less needs to be done. At most, some basic requirements like a smartphone or a computer with Internet access. They, being anchored to the USD, fulfill the same functions. From there, people jump to Bitcoin, Ether, Litecoin and come back whenever they want. This is a way to use crypto assets without exposing yourself to volatility.