The question of how many people are truly involved with cryptocurrency is perplexing. It is a difficult situation to sift through. However, organizations are trying to determine how many people are using cryptocurrency. They are looking at the wallet usage and trying to link them to real people.
One such entity is the group at the Cambridge Center for Alternative Finance. Their estimate is that we now have 100 million people have Bitcoin and other crypto-based assets.
Could this be an important milestone? Round numbers like this are always attractive. It is also a large enough number to serve as a springboard to larger growth. Technological adoption tends to happen, if it does, on an exponential and accelerating scale.
Here is a chart put out by Deutsche Bank a couple of years ago. It tracks the path of Internet users along with Bitcoin wallets. The key is the time factor of monitoring from when both technologies became open to the public.
Keep in mind this is only Bitcoin wallets totals and estimates.
Of course, wallets do not equal people which could be of major impact. It is likely that an individual has a number of wallets, especially if he or she is utilizing many different cryptocurrencies. Thus, we will likely see the number of wallets, over time, far exceeding the user base.
One of the key variables is the pace of growth. Since figuring out the raw numbers is so difficult, growth rates are double tough. However, there are some estimates that we can work from.
In 2018, the 2nd Global Cryptoasset Benchmarking Study estimated the number of identity-verified crypto users at about 35 million globally. As of Q3 2020, there are up to 191 million accounts opened at crypto exchanges — a figure which doesn’t include self-hosted wallets.
“This 189% increase in users may be explained by both a rise in the number of accounts (which increased by 37%), as well as a greater share of accounts being systematically linked to an individual’s identity, allowing us to increase our estimate of minimum user numbers associated with accounts on each service provider.”
The 191 million accounts is an outstanding figure. Naturally, here again, accounts do not necessarily equal individuals. It is common for one to have accounts on multiple exchanges.
Nevertheless, a 189% increase is a significant growth rate. If we can see anywhere near a similar repeat over the next 18 months, things will start to get very interesting.
Another key component is the idea of acceleration. Typically, while things are moving towards adoption, the pace is not consistent. In fact, the move from early adopter to a more general acceptance is usually associated with much higher rates of growth.
On a chart it looks something like this. Notice how this mirrors the "S Curve" that is so often related to the adoption of a technology.
The accelerating rate of growth provides an exponential impact upon the numbers. While 189% is an enormous growth rate, it is unlikely that the user numbers have seen the exponential part of the curve yet. Instead, we are still at the bottom of the curve towards the lower left.
DeFi certainly captured the imagination of many in the crypto world. Is it attracting newer users? This is something we will find out down the road. However, as with the ICO craze, even if it does end up popping, the number of people exposed to this industry grows a great deal. While many will leave, they are at least aware that it exists. This can be leveraged at a later date when the next "hot thing in crypto" occurs.
As stated a number of times, the next leg of digital asset growth could come from the gaming sector. This is where we could see the numbers start to go vertical. With 2 billion people already involved in that sector, there is a large market to draw from.
Thus, 100 million people being involved in crypto assets is a solid foundation. When looking at things statistically, the numbers work out the same. However, the true impact of starting from the point of 5 or 10 million users simply is not significant enough in the overall picture. On the other hand, 100 million can multiply into some pretty big numbers in a short period of time.
We can see a lot of room for growth. According to Statista, there are over 4.5 billion users on the internet.
Consider the fact that all of these are eligible to by users of crypto assets and we can see how the potential growth rate can absolutely explode.
These are some exciting times.
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