Crypto is Growing Faster than the Internet Did
Happy Monday!
I get asked a lot whether it’s “too late” to start getting into crypto now. If you’ve been reading these newsletters, you should already know what my answer to this question is… but today I wanted to shed a bit more light on some of the reasons why I think crypto is still quite early, and where we might be headed.
Crypto is all about networks – Bitcoin is a network, Ethereum is a network, Dogecoin is a network, and even individual apps such as Uniswap or Celsius are networks. These platforms and applications derive their value from the number of users that are part of their network, as well as the wider crypto ecosystem (also a form of network).
Why do more users improve the value of a network? And how does this happen?
Think about cell phones. If only one person has a cell phone, then there is no network and the cell phone is essentially useless (there’s nobody to call, text, or build apps for). However, each time a new person gets a cell phone, the value of having cell phones rises for everyone.
Crypto networks follow the same value dynamics. If only a couple of people have Bitcoin wallets, then there aren’t many options to use Bitcoin and the network doesn’t have much value. If only a couple of people use Ethereum, then there isn’t much reason for developers and businesses to come in and build apps. But as more people join these networks, the value for everyone rises – and it rises exponentially. This is the main concept behind Metcalfe’s law: the value of a network is proportional to the number of connected users, squared.
What excites me the most about crypto is that it’s currently experiencing one of the fastest growth rates in the history of technology.
Let’s compare growth in crypto users to that of the internet. It took the internet about 14 years (1992-2006) to reach 1 billion users. At peak growth, the internet was adding users at a rate of about 63% per year. This of course flattened out as adoption grew.
Currently, crypto is growing its user base by around 110% per year (as measured from 2015). Even if we assume that this growth rate tapers off as soon as next year… this still puts crypto on track to reach 1 billion users by 2024… and 3-4 billion users by 2027 or so. Today, there are only an estimated 221 million users (based on a report from June).
At it’s peak the internet grew by about 63% per year. Crypto is currently growing at 113% per year
With this kind of user growth, it will be simply impossible for the crypto market not to grow as well. Plain and simple.
So, if we want to know whether it’s “too late” or not to be getting into crypto, we just need to ask ourselves – do we think these networks are going to continue to grow?
Of course, unlike the trend in users, the market won’t go straight up. It will (and has been) a bumpy ride, subject to the whims and emotions of investors all across the world.
But in my opinion, the simple fact is that holding assets in the fastest growing technology phenomenon we’ve ever seen will almost certainly be a winning proposition over the long-term. We don’t need to complicate it any more than that.
With the expected advent of central bank digital currencies, Facebook’s diem, and easier-to-use interfaces for new users, it may even be the case that crypto has not reached peak growth yet, and won’t “taper off” for another few years still. In that scenario we could see large-scale adoption of crypto arrive even sooner.
Another good sign is that existing users of crypto tend to be pretty happy, and are resolutely confident in its future. In a recent survey of 60,000 existing crypto users, 97% said they were very confident in the future of digital assets. These people may obviously be biased, but they are also the ones directly using the tech – they know how powerful these new apps are (and if you’re using crypto apps – such as Celsius Network – for passive income, you probably agree!).
Next time you (or perhaps someone you know) gets worried about timing the market, my advice is to take a deep breath and mentally zoom-out. The trajectory of crypto is clear, it’s promise is powerful, and it’s not going anywhere. In fact, it is growing every day by leaps and bounds, even faster than the internet did.
Crypto News:
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Road to Babylon Services:
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If you’re interested in accelerating your crypto journey, but just need someone with experience to talk to, head on over to the consultations page and pick the option that is right for you (including the 20 minute consultation you can schedule free of charge). My most popular option is the quarterly consultation package, where we will meet 1-1 each quarter to discuss, revise, and update your goals, portfolio, and strategy in crypto.
Have a great week!
Shahar
This newsletter is meant for informational purposes only. It is not meant to serve as financial advice. If you are interested in financial advice, please schedule a personal consultation with me, and be sure to read the accompanying disclaimer.
