Can crypto reach 1 billion users by 2025?

Since its inception in 2010, Bitcoin has seen its value and popularity grow exponentially, laying the groundwork for a market that has reached $1 trillion in value within a decade. Cryptocurrencies have seen increased adoption in the wake of broader macro turmoil, with millions of new users on board the decentralized world of cryptocurrencies as a hedge against traditional finance.

Despite its current growth, some believe the crypto industry will have a limited lifespan. Critics expect the increase to plateau and decline as regulatory pressures and internal market struggles create more user losses.

However, many expect the new technology to follow the same adoption curve as the internet and phones before it.

This report examines the factors that could contribute to Bitcoin’s growth and help the crypto industry reach 1 billion users by 2025.

Diffusion of innovation theory best describes the rate at which new technologies are adopted and diffused. It explains how the adoption of any new technology follows a bell curve – a small group of innovators and early adopters at the start gives way to a larger group of majority early adopters, followed by an even larger group. large number of late majority adopters. Finally, the bell curve ends with a small group of late adopters.

The ubiquitous bell curve graph has been applied to everything from steam engines to telephones, showing how quickly technologies have been adopted by society at large.

Applying the scale to Bitcoin shows that the crypto market is still in its infancy. A 2022 report of Wells Fargo calculated that cryptocurrencies still haven’t reached an adoption inflection point, comparing them to the popularity of the internet in the mid to late 1990s.

Comparing Bitcoin to the internet has become the go-to case study for those rooted in the success of the crypto industry. Data from Global Macro Investor revealed that cryptocurrencies have seen the fastest rate of adoption of any rate technology in history, growing 137% annually.

Besides the exponential growth that the Internet and Bitcoin experienced in their early years, the two technologies have many other similarities. Both saw their popularity surge after a small group of tech-savvy users brought them to the mainstream. Both struggled to attract a wider audience due to the technical knowledge required to use it. Both came under regulatory pressure as government agencies struggled to control the technology.

Calculating crypto adoption is very complicated. Unlike the internet, which requires looking at the number of people with direct access to an internet connection, cryptocurrencies and their adoption are much harder to quantify.

Adoption can be measured by the amount of capital flowing into the market. While this method certainly puts market value into perspective, it says little about the actual number of active users.

It can also be measured by the volume of transactions and the number of transactions on a given network.

Another more reliable way to measure adoption is to calculate the number of users. However, this presents another set of problems due to the pseudonymous nature of blockchain technology. Simply counting cryptographic addresses will not provide a reliable result, as one address does not equal one user.

For this report, an increase in non-zero Bitcoin addresses and the number of active users on centralized exchanges are a sign of growing adoption.

User counts on centralized exchanges can be used as a proxy for wider crypto adoption.

Take, for example, Coinbase. In 2021, around 25% of the entire crypto market used the US-based exchange, making it one of the most popular cryptocurrency services in the world. As of February 2023, the exchange has around 110 million verified users.

With an average annual user growth of 92%, Coinbase is overtaking the internet with an average annual growth of 43%. If the exchange continues to grow its user base by the internet’s conservative estimate of 43%, it could see its user base triple by 2025.

Comparing the size of the crypto user base with the internet further confirms the growth potential of the industry.

Some experts believe that the current state of the crypto industry is comparable to that of the Internet in 1999. Back then, new technology slowly gave way to what would later be known as the crypto boom. dot-com and had approximately 248 million users. The Internet took another six years to reach 1 billion users in 2005.

Some estimates show that the crypto industry could have around 605 million users in 2023. Applying the Internet’s average annual growth of 43% to cryptocurrencies shows that the sector could grow to 1.2 billion. users by 2025.

Even with the average annual growth of 17% the Internet experienced between 2002 and 2006, the crypto industry could see over 900 million users by 2025.

According to the innovation diffusion model, a technology is in its early stage even when it reaches 13.5% of the market.

Given that the 605 million crypto users in 2023 represent 7.5% of the world’s population, we can safely say that the industry is still in its infancy. The 605 million users are still considered early adopters, as crypto would require an additional 700 million users to reach early majority.

Although cryptocurrencies and the internet are inherently different technologies, they have many similarities due to their transformative potential.

Applying the most conservative adoption rate the internet has seen to cryptocurrencies shows that not only could the industry reach 1 billion users, but it could reach them much faster than any other technology. Of the history.

A rise in mistrust of the traditional financial system fueled by macroeconomic turmoil is making cryptocurrencies, especially Bitcoin, an extremely valuable proposition for millions of people. As the technology continues to develop and its use cases increase, we could see this rate of adoption accelerate.

However, it is important to note that these are rough estimates. Any number of black swan events could impact that adoption rate and set the industry back years. A tectonic shift in the regulatory approach could render cryptocurrencies essentially unusable in many parts of the world.

Nonetheless, putting the growth of the crypto industry into perspective shows that it is still in its infancy, awaiting its full potential.