What’s stopping a crypto hyper-adoption?
Recent examples of hyper-adoption include smartphones in the late 2000s through mid-2010s and the internet in the mid-to-late 1990s. The common denominators are that both are adoptions of new technology and neither happened overnight. So what have we learned? After working out the kinks and expanding the utility, if the value of a new technology becomes universally apparent, there is an acceleration in adoption rates over a short time. According to mainstream financial institutions like Wellsfargo, cryptocurrency is on its way to being the next such example of hyper-adoption. A supporting projection eyes 2022 as the beginning of such an acceleration with a predicted 3X growth of crypto participants in 2022 (from 292million to 1billion users).
Regardless of your philosophy on the future of decentralized finance (DeFi), there is an undeniable truth–cryptocurrencies are here to stay. How exactly will the future look? Well, no one can be certain. What is clear is that the critical factors impeding further growth are the complexity and utility of DeFi investments. Most retail and individual investors have yet to be satisfied with the answers to “how do I get it?” and “what can I do with it?” While Cashapp and exchanges like Binance and Coinbase have addressed some complexities and new crypto ETFs have added some utility, these developments still leave most wanting.
So, who are these remaining people, and what will move them into DeFi? With a bit of irony, we believe the answer is traditional finance. These crypto-abstainers are traditional investors waiting for access to DeFi investments through familiar means, like their trusted asset managers, financial houses, or banks.
“Even as a developer, I found the complexity of DeFi investments to be a bit much. I spent way too much time on these investments. I wanted an easier, less time-intensive way to invest in DeFi just as I had with traditional finance products.”
- Co-founder and CEO, Rebus, Nicola Onassis
Who is the Traditional Investor?
To clarify, we’re talking about the segment of traditional investors currently inactive when it comes to DeFi. These are working professionals earning above-median incomes, perhaps business owners, and found across the middle and upper socioeconomic classes. A portion of their income is put to “work” in the market, earning interest, dividends, Etc. How do they do this? Typically, by giving their money to a trusted professional with the expertise, access, and time to consume research and analyze data to make appropriate investment decisions. This relationship allows the investor to continue focusing on their primary means of income, their families, or hobbies while building toward…whatever they choose.
Decrease Complexity, Increase Adoption
Is getting into crypto prohibitively complicated? You, the reader, probably are invested and know firsthand how DeFi investing has taken root as a part of your daily life. While that may be fine for you and the rest of the early minority of crypto adopters, we’re talking about the rest. We’re talking about the majority of stock-owning investors not yet in crypto. The time spent learning, researching, configuring, and executing trades is enough for these people to move “getting into crypto” off this weekend’s to-do list and into the waste bin of abandonment.
Increasing market participation by lowering barriers to entry is a relatively trivial economic concept. In early 2022, Wellsfargo published an analysis comparing crypto adoption to other new technology adoptions of years past, namely the growth of the internet in the mid-to-late 1990s. This analysis showed that crypto is indeed following a similar trend as the internet. Essentially, the adoption of the internet gained speed first with the reduction in complexity of setup, followed by the improved utility of the internet. Making DeFi investments available through traditional means will undoubtedly move the needle, and we’ve seen some of that already. But what about those still unsatisfied with answers to “what can I do with it?”
More Utility, More Users
The utility of an asset is what uses it has. Think about Victorinox’s Swiss Army Knife and its many uses. Financial assets are no different. They can be leveraged for loans, set up in trusts, traded for other assets, invested in particular stocks or indices, and more. Naturally, an investment with many uses is more valuable than one with few. Today, the utility of cryptocurrencies is chained by regulations, or the lack thereof. Such limited utility continues to hinder adoption.
According to a May 2022 report by Gallup, 58% of Americans own stock. According to Wellsfargo, only 13% of Americans own crypto. If we’re doing napkin math, that’s roughly 150 million Americans lying in wait, ready for crypto products to be offered by their preferred institution with uses beyond simply buying and selling coins. Given recent developments and discussions from regulators, one should assume that every diversified portfolio will eventually include crypto assets. But how soon?
Today, there are still only three main ways to get into crypto:
- Buy from an exchange: This is like picking a new bank. Once you do, buying crypto is easy, but provides very little utility beyond buying and selling coins.
- Mutual Funds or ETFs: This less complex option is not backed by the actual crypto-assets but, instead, futures, creating a trust gap for many, on top of limited utility. This can sometimes be accessed through a trusted advisor.
- Private placements: Investors must manage their own keys, meaning it is the most complex option. Utility is still limited.
Research published by crypto.com in Dec 2021 concluded that the overwhelming success of new Bitcoin and Ethereum spot ETFs (like Valkerie) proved the value of adding DeFi products to traditional finance. If you don’t believe Crypto.com or Wellsfargo, the efforts by the following mainstream banks and financial houses in joining the crypto fray should settle any doubts: Morgan Stanley, Citi, Goldman Sachs, JP Morgan, EY, Bank of America, and Credit Suisse.
These moves support our initial stance that providing DeFi products to traditional financial houses and the like is the final lynchpin leading to a hyper-adoption phase of crypto. Which is great, but again, when will that be?
So, how do we bring DeFi to Traditional Investors?
Two critical pieces must work in unison for such a growth phase to occur: the technology and the laws. Fortunately, the underlying technology has evolved to a point where we have what is needed. However, the legal and regulatory aspect is the tenuous piece of this puzzle. How will regulators allow banks (et al) to offer such products to their customers?
A 4th Option — The Rebus Platform
Fortunately, the problems with complexity and utility are precisely what the Rebus Platform solves by providing access to DeFi financial products through traditional and familiar ways. The Rebus development team leverages the Cosmos Ecosystem to create a platform that satisfies regulators and allows banks to sell DeFi products to their customers. In short, it’s the much awaited fourth DeFi investment option:
4. Buy From Your Trusted Financial Institution: The complexity of key management is removed. Investors simply request diversification into crypto and their asset manager will have DeFi products to offer just as with traditional investments, all of which are enabled by the Rebus platform.
The platform works by executing all smart contracts using our native $REBUS coin as a necessary intermediary. As the availability of these products spreads across the traditional financial system, so will crypto adoption by traditional investors looking to diversify in an easy and familiar manner. In short, the Rebus platform is good for the entire cryptocurrency asset class, but also makes $REBUS an intriguing pickup with the launch of our IDO and subsequent Airdrop, both planned for Summer 2022.
“If you told me I could sell this product to my customers today, I’d make it a new mandatory part of their portfolio tomorrow.”
- EY Business Development Leader
If you’re already invested or interested in the Cosmos Ecosystem (e.g., $ATOM, $JUNO, or $OSMO) this is undoubtedly a project you’ll want to follow. To learn more about the products and how they work, visit our site.