Cryptocurrency is rapidly entering various industries and sectors of the financial system. Compared to the slow development of the crypto market in the early 2010s, nowadays, crypto adoption is growing fast. Businesses across the world are beginning to add crypto to their portfolios. Although crypto is still far from full global adoption, it’s already penetrating numerous markets. Today, a huge number of cities have retailers and merchants accepting crypto. However, there’s still a long way to go until crypto becomes accepted on a mass scale like fiat currency. Institutional adoption is crucial in the global adoption of digital currencies, but the traditional financial system is still firmly tethered to banks and the stock market. Nonetheless, the current level of crypto adoption is a huge step forward from the early days of crypto.
This article will explore the current magnitude of crypto adoption among retail businesses and institutions. We’ll take a detailed look at which types of companies are incorporating crypto services in their daily operations. Also, we’ll find out what’s happening with crypto adoption among banks and government institutions. Stay with us at Moralis Academy to find out how global crypto adoption is going.
The whole crypto market has a value of around one trillion US dollars. This value is a drop in the ocean if we compare it to the total assets held by global financial institutions. In 2021, this amount was a staggering 468 trillion US dollars. The crypto market is around a decade old, while the fiat system is firmly accepted worldwide and has been around for much longer. One of the reasons why the fiat system is dominant is that both institutions and consumers accept it. The key to mass crypto adoption is building users’ trust and reaching widespread acceptance. Although financial institutions are reluctant to join the crypto market, they’ll need to do so if they want to keep up with user demand. The degree of user demand for crypto is constantly growing and pushing retailers and institutions to embrace digital currencies.
Statistics show that as many as 13 percent of US citizens own some cryptocurrency, which is around 36 million people. At the same time, approximately 4.2 percent of the world’s total population owns crypto, which amounts to about 320 million crypto users. This number of users is drastically higher compared to a decade ago when there was a minimal amount of cryptocurrencies and just a few exchange platforms. The rise of the crypto adoption rate among users pushes businesses to adopt crypto. More and more users are demanding access to digital currencies and wish to use them to pay for everyday expenses and investments.
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Banks are the backbone of the traditional financial system. Historically, many banks have held a negative position towards cryptocurrency. However, as the demand for digital currency exposure increases, so does the number of banks willing to deal with crypto. Just a few years ago, you could rarely find a bank offering crypto services or even banks that accept transactions that originate from crypto. The situation is steadily changing. The vast majority of banks don’t have crypto services yet, but numerous banks are paving the way for crypto adoption in the banking sector.
Some major banks like JPMorgan Chase, Bank of America, and Goldman Sachs began offering crypto services in the US. For example, JPMorgan has its JPM coin for cross-border blockchain payments. Bank of America allows users to invest in exchange-traded funds (ETFs) that give exposure to selected crypto markets. Goldman Sachs even has a crypto trading desk and offers users access to Ethereum investment funds. A growing number of banks are beginning to accept crypto cash-out transfers from crypto exchange platform accounts.
A recent survey found that 60 percent of crypto holders would surely use bank services to purchase cryptocurrency if their banks would suddenly introduce the option. Another 32 percent of crypto enthusiasts said they would consider using their bank’s crypto investment features. Banks and TradFi institutions are still cautious when dealing with crypto. However, the growth of the crypto market is pushing them to introduce crypto services.
During the early years of digital currencies, government officials either ignored crypto or had an explicitly negative stance toward the new financial asset class. Times are changing, and governments are slowly beginning to figure out ways to include crypto into the existing system. Various governments have passed bills to regulate the crypto market in the last two years. Also, governments worldwide are exploring options to introduce central bank digital currencies (CBDCs), which correspond to the value of local fiat currencies. The US and the EU will issue a CBDC in the coming period.
Some government institutions are also exploring ways to incorporate blockchain technology in their operations. In Jackson, Tennessee, the local government formed a task force to explore options for implementing crypto payments for taxes, fees, and salaries in the city. Miami has its own MiamiCoin for financing public projects to improve the community. In Reno, Nevada, local institutions use the Chainlink oracle system to store and manage data access.
However, some governments have an explicitly hostile stance on cryptocurrency and banned the industry altogether, like China and Indonesia.
Crypto adoption by governments is of critical importance for the future of crypto. The growing number of crypto users on a global scale appears to be pushing governments toward a higher rate of crypto adoption.
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The number of large-scale investment firms beginning to include crypto in their portfolio of assets is rapidly growing. Numerous crypto-focused investment firms have grown substantially over the years. Investment firms are essential for global crypto adoption because they contribute to the growth of the whole blockchain industry. These firms tend to invest considerable money in projects with high profitability potential. When crypto was in its infancy, there was only a handful of venture capitalists and investment firms on the market.
In recent years, the Web3 industry has been in the spotlight of many investment funds pumping millions of US dollars into crypto startups. Without the funding, it would be tough for crypto startups to develop and launch their products on the market. The growing number of crypto investment firms is another result of user demand and the high potential profitability of Web3. Companies like Andreessen Horowitz, Alameda Research, Coinbase Ventures, Binance Labs, Pantera, Draper VC, and Paradigm are some of the key players driving crypto adoption. As the market continues to expand, we can expect new investment firms to emerge, as well as an increase in the activity of current companies.
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E-commerce platforms enable retailers to quickly set up online shops and start selling their goods to customers worldwide. The e-commerce industry had a 10.36 trillion US dollars valuation in 2020. In line with the growing demand for crypto exposure, many leading e-commerce platforms began including crypto payment options. Many top e-commerce companies like Shopify, Magento, WooCommerce, BigCommerce, and Overstock joined the crypto market. Crypto enables both e-commerce buyers and sellers to benefit from blockchain technology.
Buyers get to pay with crypto and avoid complicated purchase procedures and transactions. Also, there’s no need to provide personal information when purchasing with crypto. Sellers benefit from receiving their payments in minutes or even seconds. However, many e-commerce sellers aren’t aware of crypto’s possibilities. Crypto transfers often cost far less than traditional fees. As more buyers and sellers grasp how they can benefit, the portion of crypto transactions in the e-commerce market will likely rise.
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A survey from 2020 found that 36 percent of US small to medium businesses accepted Bitcoin payments. Another research from 2022 suggests that 75 percent of retailers will include crypto payments in their business during the next two years. These statistics showcase the rapid growth of crypto adoption among retailers. A few years ago, buying clothes, food, event tickets, and other products with crypto was unimaginable. Of course, you can still only pay at some retailers with crypto, but the number of merchants with this option is increasing.
Consumer demand is one of the critical factors driving merchants to accept crypto, but they can also benefit from low fees and instant transactions. Around 83 percent of merchants anticipate that consumer interest in crypto will rise. As far as buyers are concerned, a report shows that 49 percent of users think the limited number of businesses accepting crypto is a massive barrier to crypto adoption. However, user demand continues to drive merchants toward further crypto adoption and make digital currencies a more attractive payment option.
Luxury brands join the trend as the crypto market grows and retailers include digital currency payments. Leading luxury brands like Tag Heuer, Gucci, Balenciaga, Off-White, and many more accept crypto in their stores. Some of these brands joined the metaverse by opening metaverse stores and issuing exclusive NFTs. Although luxury brands aren’t a large portion of the retail market, they certainly receive the most publicity. This publicity is beneficial for crypto adoption. When luxury brands decide to include crypto payments, they inspire other brands, especially less famous ones, to follow in their footsteps. Also, crypto adoption among luxury brands is creating a very competitive environment. They are racing with each other to provide more options and better quality crypto services to users.
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Famous sports clubs have multimillion-dollar annual revenues and have massive fan bases. Basketball, football, and soccer teams are immensely influential, and when they begin introducing crypto in their retail businesses, that’s massive news for crypto adoption. Numerous sports clubs are signing high-profile sponsorship deals with crypto companies and promoting them to millions of fans. In February 2022, Tezos, one of the top-100 cryptocurrencies, signed a partnership with Manchester United. The sponsorship deal has a value of 27 million USD per year. Exchanges like FTX, Crypto.com, and Coinbase spent millions to appear in the Super Bowl LVI ads.
Additionally, many sports clubs are including crypto in their businesses and allowing fans to purchase tickets, merchandise, or even snacks with crypto. This includes RCD Espanyol, Dallas Mavericks, and the Mexican Tigres are all examples of clubs that accept crypto.
Payment Service Providers
Payment service providers are some of the most critical drivers of crypto adoption. These companies bridge the gap between crypto and fiat currencies. Popular payment providers like Banxa, Transak, Binance Connect, and Simplex allow users to pay for services and products with crypto quickly. Recently, PayPal, one of the largest online payment providers, also included crypto services in its portfolio.
However, payment card companies like Visa and MasterCard play the most crucial role in retail adoption. These payment card providers are partnering with crypto exchanges and crypto payment services worldwide to enable users to spend crypto easily. Platforms like Crypto.com, FTX, Binance, and numerous others already have crypto debit cards in cooperation with Visa or MasterCard. Users can top up their cards with crypto and spend funds at millions of retail spots worldwide. The cards automatically convert crypto to fiat during the payment process.
Exploring Retail and Institutional Crypto Adoption – Summary
By adoption metrics, the crypto world is expanding. Users are demanding more crypto services, while more and more businesses are including crypto features. Before we can say that digital currencies are mainstream assets, there’s still much development to go. However, companies’ rapid crypto adoption shows that the trend is positive. Many see the mass adoption of crypto by businesses as a matter of time, while others predict it will take a lot of work with institutions. Governments are hesitant to adopt crypto, while banks are also cautious.
It remains to be seen how the future of crypto adoption will develop, but currently, the industry is thriving.
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