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By now, many of us have seen this graph comparing internet adoption to crypto adoption.
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Crypto is adding new users at a pace so similar to the internet’s 1990s growth that it can fuel stunning forecasts for what’s ahead for digital assets.
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Before you get too excited, though, I’d argue that’s too optimistic.
The internet is too broad for comparison. It’s used for everything in our lives. Crypto has many use cases, and there is hope for Web3, but for the average consumer, crypto is either a speculative investment or a means of transferring value.
I recommend a bottom-up approach to analyze adoption, looking at consumer behaviors from comparable use cases.
Consider the adoption of financial services technologies:
- Mobile Banking: This was introduced through banking via text message in 1997 and the first mobile banking app in 2007. In 2021, McKinsey reported that among all bank customers, only 52% of North Americans, 47% of Western Europeans and 45% of Central Europeans used mobile banking. This is consistent with a 2023 Cornerstone Advisors report stating 56% of checking account holders are active mobile banking users. It’s important to note that only 76% of the global population has a bank account.
- Stock Investing: Gallup found that 61% of Americans report owning stock and Pew Research reports only 35% of Americans own stock outside of their retirement accounts. And in-person touchpoints are important, with Chase sharing that 85% of first-time investors come from banker referrals.
What do these numbers tell us?
People take decades to adopt what many of us in the finance industry consider basic financial technologies. And crypto is not basic.
Seeing that less than 50% of the world uses something as simple as mobile banking 26 years after its debut, coupled with the fact that only about a third of Americans actively invest in stocks (the New York Stock Exchange opened in 1792), should make us question crypto’s growth trajectory beyond early adopters.
Even with population growth, crypto may struggle to reach 5 billion users by 2047. More detailed analysis is needed, but with the continued digitalization of our traditional banking system, I think a more conservative back-of-the-envelope estimate is a range of 2 billion to 3 billion users, and that’s if regulation doesn’t get in the way.
Remember, crypto has to beat (or join) the current way of doing things, which is still advancing and still not yet fully adopted.
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