Feb 2, 2024 - Economy

Cryptocurrency adoption is going more slowly than the web

Illustration of two globe stands, one with the World Wide Web icon and one with a pixelated coin.

Illustration: Shoshana Gordon/Axios

The cryptocurrency industry's adoption by the public is going appreciably more slowly than the public internet, any way you look at it.

Why it matters: The idea that crypto is roughly on the same trajectory as the web is something that gets thrown around a lot, but it's helpful to look at hard numbers.

In the weeds: The team at mergers and acquisitions advisory Architect Partners did a year-by-year comparison of the internet's before times with the present of the still-nascent cryptocurrency sector.

  • The report marks year one of the widely usable internet at 1995, the era of infinite America Online installation CD-ROMs. Similarly, it puts year one of cryptocurrency at 2017, when tokens first made ebullient speculation something of a global phenomenon.
  • More importantly, that puts each genesis year four years ahead of speculative bubbles in each domain.

By the numbers: By that accounting, some comparisons become easy to make. A year after their respective bubbles, the internet saw $75 billion in investment, while cryptocurrency saw $29 billion.

  • Both went through a significant downturn in investment the next year.

The value of the internet at its early peak in 2000 was $5.6 trillion, while cryptocurrency only crested $3 trillion.

  • Adjusted for inflation, the authors note, the early internet was worth more lik $9.6 trillion in 2000.

In 2000, the internet had an estimated 414 million users, while cryptocurrency had something like 190 million in 2022.

  • Yes, but: That's being generous. The authors here are counting crypto wallets as "people," but lots of individuals have many crypto wallets. How overstated are their numbers? There's no way to really know. (My take: a lot — but, to be fair, there isn't a better way to count.)

The intrigue: Blockchains could just be a technology searching for a problem to solve, as many suggest, but it also could be that getting into crypto is much harder than getting online.

  • Though logging in wasn't that easy in 1995. It was largely dial-up connections, and hopeful web surfers typically had to manually install a modem on their computers (which was a headache).
  • And the report points to another major source of friction for money-on-the-internet:
  • "It's hard to imagine a more formidable foe than the global financial system, one that is far more resilient than brick-and-mortar retailers resisting e-commerce," the team writes.

Catch up fast: Here in 2024, bitcoin just turned on the easy button.

💭 Brady's thought bubble: It could be argued that 2013, four years out from the initial coin offering boom of 2017, should really be crypto's year one — at least in this analysis.

  • (The numbers get even worse that way.)

The bottom line: If this is 2002 on the blockchains (or even if it's 2006), then we're still well out from the IPO of Facebook (now Meta) in 2012 and, remember, even then, lots of people claimed the social media giant would never make real money.

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