Crypto.com raised a few eyebrows this past week when it announced cryptocurrency users worldwide could reach 1 billion by the end of 2022. The timing
Crypto.com raised a few eyebrows this past week when it announced cryptocurrency users worldwide could reach 1 billion by the end of 2022.
The timing was curious, given that Bitcoin (BTC) and many other cryptos are entwined in one of the largest drawdowns in their (albeit short) history and with the prospect of United States Federal Reserve interest-rate tightening edging ever nearer.
But the cryptocurrency exchange, which in November gave its name to the arena where the Los Angeles Lakers basketball team plays in a 20-year deal, was obviously taking the long view.
Also, its prediction was contingent on two things happening: one in the “developed” world, the other in less-mature national economies. It also involved some statistical extrapolation. To wit, the main arguments for a great crypto leap forward:
- Crypto.com expects the world’s developed nations to devise “clear legal and taxations frameworks.”
- “More nations facing a highly inflationary economy and depreciating currency may adopt cryptocurrency as legal tender, following the example of El Salvador.”
As for the extrapolation, the firm reported that “in 2021, the number of global crypto owners almost tripled, from 106 million in January to 295 million in December. If we extrapolate a similar rate of increase in 2022, we are on track to reach 1 billion crypto users by the end of 2022.”
But is 1 billion crypto users by year’s end really doable — particularly in light of the 50% market price retrenchment from early November’s high mark?
Maybe there are good secular reasons, including demographics, to believe that adoption will continue to grow exponentially. But will other nations really follow El Salvador’s example, given that the nation’s BTC investment is currently underwater, and if so, who might be next?
Finally, what, if anything, could still derail the steady, upward arc of global crypto adoption, which now stands at 3.83% of the world’s population, according to Crypto.com?
A generation gap
Nigel Green, CEO of the deVere Group, sees nothing far-fetched about this projection. “There is every reason to believe this could be true,” he told Cointelegraph when asked about the exchange firm’s prediction, in good part “due to a snowball effect of mass adoption and increasing understanding of and interest in digital currencies.”
“It comes down to demographics. Younger people are more likely to embrace crypto than older generations, and we’re coming into the Great Transfer of Wealth. This is where Baby Boomers will transfer an estimated $40 trillion–$68 trillion to Millennials.”
Others confirm this generational reality. “Let’s face the fact,” Wharton School professor Jeremy Siegel said recently, “Bitcoin as an inflation hedge in the minds of many of the younger investors has replaced gold. Digital coins are the new gold for the Millennials.”
Yu Xiong, professor of business analytics and director of the Center for Innovation and Commercialization at the University of Surrey, told Cointelegraph that the number of crypto investors globally “is still very low” in the overall scheme of things.
Crypto.com’s methodology for counting crypto users is more rigorous than most, but 300 million current users could still be on the high side, and “there is huge potential for more people to participate and push the value high. I saw many college freshman students buying cryptocurrencies” in the past year, Xiong said.
Xiong believes that global turmoil, both political and economic, should bolster adoption. “We are facing a more and more uncertain world, such as what’s happening in Russia and Ukraine, and in Taiwan.” People see surging inflation in Turkey and other countries. In such circumstances, “it’s unlikely that the value of Bitcoin would not increase.”
But is it really a sure thing? This past week, after all, the International Monetary Fund urged El Salvador to walk back its decision to make Bitcoin legal tender, citing concerns about “financial stability, financial integrity and consumer protection.” Elsewhere, Harvard University’s Kennedy School professor Jeffrey Frankel declared that “El Salvador’s adoption of bitcoin as legal tender is pure folly” — in good part because of BTC’s price volatility.
Still, a Jan. 6, 2022, research report from Fidelity Digital Assets (FDA) drew a different conclusion from the El Salvador experiment, with FDA declaring that it “wouldn’t be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.”
In that report, authors Chris Kuiper and Jack Neureuter outlined a “very high stakes game theory at play” where countries seem to realize that if they secure some Bitcoin today, they “will be better off competitively than their peers.” Kuiper, a research director at FDA, further explained this notion to Cointelegraph:
“The first participant or country to make a…
cointelegraph.com