Price halved, why is Bitcoin still widely adopted?
Since 2022, the crypto market has continued to be volatile, and the price has dropped by more than 50% since the high point in 2021. Then the price halving did not seem to affect Bitcoin adoption. Crypto is still seeing some exciting developments in redefining ownership and value transfer.
Crypto adoption is nothing new
Adopting cryptocurrencies in everyday life is not a scary or unusual thing. Data shows that cryptocurrency users are growing at an annual rate of over 100%. This far exceeds the adoption rate the internet saw in the 1990s and early 2000s. If this adoption slows to 80%, the cryptocurrency will still reach 1 billion users by 2024. This means that 1 in 8 people on the planet will interact with or use cryptocurrencies in some way.
Since the end of 2020 after the start of the pandemic, cryptocurrencies, especially Bitcoin, have grown in popularity. In early October 2020, Bitcoin was worth just over $10,000. It then surged to over $60,000 a few months later. Last year was a big year for Bitcoin and other cryptocurrencies. Bitcoin peaked at $69,000 in November.
Meanwhile, a Federal Reserve survey conducted in October and November last year found that 12 percent of adults use or hold cryptocurrencies, including bitcoin. Meanwhile, over 1 in 10 U.S. adults have invested in or traded in cryptocurrencies over the past year. As digital asset investing grows in popularity, these figures may be the most authoritative data on the level of cryptocurrency usage in the United States.
But its value has since fallen. With inflation hitting multi-decade highs at the start of the year and the Federal Reserve starting to raise interest rates, investors began fleeing the cryptocurrency market in favor of less risky assets. Bitcoin’s value is now around $30,000 — halving in just a few months.
Despite the recent price drop, the Federal Reserve survey shows that people are increasingly accepting cryptocurrencies as an investment vehicle. They are also increasingly accepted by institutions, with Goldman becoming the first major U.S. bank to trade cryptocurrencies over the counter. Ray Dalio’s Bridgewater Associates also said it plans to back its first cryptocurrency fund.
Furthermore, crypto adoption continues in 2022. The adoption of crypto payments has continued to increase this year. French luxury brand Balenciaga has said it will accept cryptocurrency payments in the U.S., with its website balenciaga.com, select stores on Madison Avenue in New York and Rodeo Drive in Beverly Hills offering cryptocurrency Currency payment methods; LVMH’s Swiss luxury watch brand Tag Heuer announced that its US market official website will support 12 major cryptocurrencies and 5 stablecoins as payment options, and will soon allow more digital currency payments; luxury Brand Gucci began accepting cryptocurrency payments in some U.S. stores later in May and plans to expand the pilot to all of its North American direct-operated stores this summer; Bentley University in the U.S. accepts BTC, ETH and USDC for tuition payments; Singapore Restaurant Maison Ikkoki accepts BTC, ETH and BNB; global yachting events brand Camper & Nicholsons accepts BTC; Dubai businesses accept cryptocurrencies as a future payment method…
Expansion of financial services to developing countries
Notably, the Federal Reserve survey showed that while 12 percent of adults use or hold cryptocurrencies, including bitcoin, only 3 percent use them for financial transactions. The study shows that people who use cryptocurrencies as an investment vehicle almost universally use traditional banking services and have other forms of retirement savings. The demographics of the small group of people who use cryptocurrencies for financial transactions are very different, including those whose average income is much lower than those who only invest in cryptocurrencies. Those who transact with cryptocurrencies are also more likely than the average adult to lack bank accounts and credit cards. This also reflects one of the advantages of Bitcoin is that it does not rely on any intermediaries. Provides financial participation for those users who lack bank accounts and credit cards.
Earlier, the president of El Salvador had said that 70% of El Salvadorans do not have bank accounts, and the move to use bitcoin will open up financial services to these people. Furthermore, in countries such as El Salvador, many people’s livelihoods are highly dependent on expat remittances. In El Salvador, expat remittances account for 20% of the country’s gross domestic product (GDP). Expats typically send money domestically through a bank or other financial services provider, but these intermediaries can drive up the cost of sending money across borders. Therefore, Bitcoin may be more attractive to some poorer countries and individuals who wish to avoid such fees. As a result, El Salvador last year became the first country in the world to adopt bitcoin as legal tender.
Nigel Green, founder and president of financial consultancy deVere Group, expects more developing countries to follow the initiative in El Salvador.
El Salvador’s President Nayib Bukele, who hosts the annual meeting of the Alliance for Financial Inclusion (AFI), is also preparing to promote the event to 32 central banks and 12 financial officials representing emerging economies. Bitcoin use and adoption. These include Paraguay, Haiti, Honduras, Costa Rica and Ecuador in Latin America; Angola, Ghana, Namibia and Uganda in Africa; Bangladesh, Palestine and Pakistan in Asia.
Moody’s data points out that the use of cryptocurrencies is highest in countries with lower ratings; the use of cryptocurrencies will be higher in countries with weaker macroeconomic frameworks and evasion of capital controls; cheaper and reliable internet data , the use of mobile phones, and the increasing trend of digitalization will also drive the use of cryptocurrencies. However, Moody’s cautions that the adoption of cryptocurrencies increases macro risks for these sovereigns, and the rapid adoption of cryptocurrencies could lead to excessive financial fragmentation of payment systems and weaken financial stability.
Demonstration of ownership value
Humans naturally like to get caught up in the hype of a narrative. We see this in politics, personal opinion, and society. The market is no different. In fact, this happens more with cryptocurrencies.
There’s no denying that the hype surrounding crypto is attracting people. With institutional interest, the rise of the NFT market, and the entry of new retail investors, we are seeing waves of new support pouring into the cryptocurrency space. Despite our hopes, these numbers can’t go up forever, and in a healthy market there’s always a pullback. But as cryptocurrency adoption increases, these cycles will move beyond the current four-year cycle into a more macroeconomic cycle (10 years), so that volatility in crypto markets will no longer be an issue.
Cryptocurrencies are not just a method of payment, they provide a trustless, decentralized and immutable value transfer system. No trust – no reliance on any third party to ensure the functionality of the protocol; decentralized – no central point of failure. i.e. not storing data on a single computer that could crash the system; immutable – cannot be changed; no one can change the data.
Based on this, its value means more than just money and can represent many things, from a house to a piece of art to the right to own something. Cryptocurrencies (and new concepts like NFTs) are bringing different types of value to the world. Blockchain systems allow that value to be transferred, stored and recorded on a verifiable ledger.
This means that individuals can control their cryptocurrencies and fully own their blockchain-based assets. They do not need to rely on banks, lawyers or any other centralized entity for ownership.
When looking into the future of the market, it is difficult to pinpoint how far the exact cryptocurrency will go, but we can identify what problems it solves and what value it brings to better understand why crypto market adoption is will continue to expand.