Crypto on the verge of mass adoption. Part 2

    20 Feb 2022

    The ongoing “crypto winter” (sort of) may surprisingly coincide with a major tide of cryptocurrency mass adoption. There is no contradiction, only laws of economics and the understanding that inflation can no longer be solved by simply halting the money printers.

    The financial business is already anticipating a surge in the mass adoption of cryptocurrencies. For example, Mike McGlone, Senior Commodity Strategist at Bloomberg, said that BTC is completing its transition to a risk-free asset category. His predictions are supported by the fact that over the past month and a half, “mega whales” (holders of more than 1 thousand BTC) have increased investments in bitcoin by almost $10 billion. According to the analytical company Santiment, large crypto investors bought 220 thousand BTC in that time – the fastest accumulation period the asset has seen since September 2019.

    Meanwhile, we hear more and more exciting news. BlackRock, an investment corporation with more than $10 trillion in assets, is looking to enter the cryptocurrency market and integrate crypto asset trading. Customers will also be able to take loans from BlackRock, leaving cryptocurrencies as collateral.

    BlackRock has not yet issued an official statement, but insider information suggests that the company has already formed an internal working group of 20 specialists to manage crypto assets, smart contracts, and a distributed ledger. BlackRock also owns a 16.3% stake in MicroStrategy, the largest corporate holder of BTC.

    Payment companies are also not far behind. A recent Visa survey showed that 25% of businesses are ready to adopt crypto payments. What’s more, the crypto card company reported a significant increase in the use of cryptocurrency on its platform in Q1 of 2022. Visa crypto card holders have spent an equivalent of more than $2.5 billion on goods and services over three months.

    In his keynote address at the company’s financial results conference, Visa CEO Alfred F. Kelly Jr. remarked that the quarterly figure represents 70% of its full-fledged cryptocurrency payments for the entire fiscal year 2021. He noted that Visa works with more than 65 cryptocurrency platforms and exchanges.

    Other market participants are following the trend as well. A major example is Apple’s new payment function, Tap to Pay, which turns your iPhone into a payment terminal. Many have already declared it a de facto crypto adoption, which is not entirely accurate. Although it can be used for cryptocurrency transactions, as Tap to Pay will allow the use of crypto cards, it doesn’t indicate official support from Apple. It’s just that Tap to Pay will work with the same cards as Apple Pay, including Coinbase Card, Visa Card, and other similar cryptocurrency payment solutions.

    Let’s be clear that we are not talking about direct payment for any goods or services with cryptocurrency yet. The aforementioned cards simply allow you to convert crypto into dollars and pay for something this way. However, it is still a massive breakthrough – by being integrated into the most widely used payment systems, cryptocurrencies finally “break out of the ghetto”.

    For the most part, corporations are essentially just appealing to their customers. A recent study assessed the level of cryptocurrency adoption by US citizens. A report by Morning Consult on the state of banking services and transactions from January 25, 24% of adult Americans owned cryptocurrency in 2021. The number is actually slightly higher than the 23% of Americans who own certificates of deposit. (A certificate of deposit is a savings account that holds a fixed amount of money for a certain period.)

    Another survey showed that 68% of US cryptocurrency holders started investing in 2021. So even in the United States, crypto is only now becoming a powerful draw for private investors.

    The increase in cryptocurrency ownership coincided with the overall market growth in 2021. For many years now, digital currencies have provided a quick way to make money. The cost of bitcoin grew at least 60% in 2021 alone, even taking into account several corrections. At the same time, storing money in a bank has become unprofitable in recent times due to low interest rates, aggravated by rising inflation.

    Currently, about 55% of cryptocurrency holders in the US and the UK would like to receive their salary in digital assets due to greater financial flexibility. A separate survey by the Paysafe payment platform showed that 60% of US cryptocurrency holders would prefer to get paid in crypto.

    Politicians, in turn, listen to the voters. For example, in Arizona, they have now put forward a bill that proposes to make BTC legal tender in the state. Of course, the law is unlikely to pass, but it sets a notable precedent. The population of Arizona is over 7 million people, and the state’s economy by itself would rank 61st in the world in terms of GDP – ahead of Norway, Denmark, the Czech Republic, Ireland, Finland, and New Zealand.

    Over in Brazil, the mayor of Rio de Janeiro is proposing to keep 1% of the city budget in bitcoin. In an agglomeration with a population of 13 million people, 1% of the budget is more than the entire state budget of El Salvador (which officially recognized BTC as a means of payment).

    Finally, in 2020-2021, corporations have invested heavily in creating new cryptocurrency projects. According to LinkedIn, US employers in 2021 posted 395% more job ads with the keywords Bitcoin, Ethereum, Blockchain, and Cryptocurrency. It is yet another indicator that the corporate sector is heavily engaged in the mass adoption of cryptocurrencies as a way to preserve their investments.

    In conclusion, let’s revisit the Wells Fargo Bank analytical report. It says at the end: today’s investors trying to figure out whether it’s too soon or too late to invest in cryptocurrencies compare it to investing in information technology in the mid to late 1990s. “The Internet then went through a hyper-growth phase and never looked back. Cryptocurrencies seem to be at a similar point today. However, crypto investment options are still at the maturation stage, so we advise patience”, the bank’s experts state.

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