In an interview that appeared on Bloomberg, Ethereum co-creator Vitalik Buterin made a shocking suggestion about where cryptocurrency is going in terms of adoption. Specifically, he said that the current avenues of growth and adoption have already passed their peak and that thousand-fold growth will not likely be seen again. This, according to Buterin, is largely because at this point in time nearly everyone in the developed world has already heard about blockchain and cryptocurrency. But is this assertion correct, or is there still more room to grow?
The Path So Far
Cryptocurrency growth since the launch of bitcoin has seen a number of pivotal phases. From the day when the first bitcoin was mined to the day when people begin trading them amongst each other could be viewed as the first epoch. The next major epoch was when bitcoin exchanges like Mt Gox became popular, and trades between bitcoin and dollars became commonplace. The next major epoch is the Ethereum phase and the subsequent ICO mania that was seen in 2016 and 2017. With ICO mania now nearing a close and most people holding increasingly negative opinions on ICO’s, it seems we are indeed seeing the end of an era.
The last major batch of new entrants into the cryptocurrency space were most likely the high risk, high return speculators that helped create the 2017 end-of-year bubble. Now that these individuals have left, prices have since returned to the point that they would be at if the bubble didn’t happen in the first place.
Running Out of Gas?
This begs the question, is the current cryptocurrency growth trajectory finished?
According to Vitalik Buterin, it’s not done growing yet, but the community at large will need to shift gears in order to target a new audience. The reason being that everyone who would be interested in getting involved in things as they are has probably already heard about it, and is either already in, or not interested in joining.
So where will the future growth not just in price but in user-base come from?
For this there are two general theories floating around. The first is that institutional money will enter cryptocurrency markets on a large scale. For example, retirement funds, hedge funds, and even big banks will begin to enter into cryptocurrency by buying up digital assets for their own reserves. Other major banking products like cryptocurrency-focused ETF’s could hit the market and bring billions of dollars into the ecosystem.
The second theory is that growth will come organically through the increased use of cryptocurrencies by individuals and businesses. While we are already seeing this today, this type of growth could take significantly longer, as the average person in the developed world is already content with using existing payment networks and services. It’s possible that this growth could instead come from disenfranchised areas of the world where banking services are rare or impossible to come by, or where cross-border remittance is too expensive.
Hearing Isn’t Enough
One of Buterin’s claims made to back up his assertion is that nearly every adult has already heard of cryptocurrency and most are choosing to not get involved. But that is not a good indicator of how much growth is left. For instance, even though the Internet has been available to individuals since early 80s, it was only in 2005 that over 50% of US households had broadband access. By the 1990s, nearly everyone had heard of the Internet before, but just hearing about it is not enough to make the decision to invest in the necessary infrastructure (such as a computer with a modem and Internet service) to get involved. Further, getting on the Internet in the 1990s was an experience that was slow, not user-friendly, expensive, and frustrating. Nearly all of those attributes could be used to describe cryptocurrency today. That could explain in part why adoption has slowed.
It is in this writer’s opinion that future growth and adoption will come not just when people hear of cryptocurrency once or twice, but when it becomes an easy to use, user-friendly, low-cost and superior payment method to what already exists today. The good news is that the back end and infrastructure already largely exists, but that simply isn’t enough. That, and a few wrong moves by a newbie could lead to a fortune in cryptocurrency stolen by an opportunistic hacker or phisher.
So what does all this mean? It means we still have a long way to go. And while we may not see thousand-fold price increases every week like we did in 2016 and 2017, adoption from here on out will be slow and steady, but nearly endless.