Web3 for TradBiz — Web3 implications and opportunities (13 of 14)
Evidence of mainstream Web3 adoption
We are still early as Web3 adoption continues among investors, financial institutions, businesses and consumers
This chapter examines where we are in terms of financial services institutions, businesses, and individuals’ adoption of cryptoassets. While there has been significant uptake globally across these groups, the data shows that we are still early in Web3 adoption, with plenty of room for growth over the coming years as the transition from Web2 to Web3 proceeds.
Institutional investments in cryptoassets and Web3 continue to grow. Major investors are continuing to make investments in cryptoassets and Web3 projects, even during the 2022 crypto winter. According to Crunchbase, venture firms invested US$ 9.3 billion in 534 Web3 deals in the first half of 2022. While this was down from US$ 12.5 million during the same period of 2021, each of the last four quarters have exceeded US$ 4 billion in total venture investments.¹ Venture firms include traditional investors who have pivoted toward Web3, like Andreessen Horowitz, investors focused exclusively on Web3, such as Digital Currency Group, and the venture arms of crypto-focused companies, like Coinbase Ventures. There also continues to be meaningful activity in the crypto fund space, with Crypto Fund Research tracking 88 fund launches in 2021, down slightly from 102 in 2020.²
Traditional financial services, or TradFi, firms also continue to adopt Web3 solutions in areas like wealth management, trading, custody services, and even as legal tender. The wealth management arms of TradFi firms like Fidelity, Goldman Sachs, Citi, and JPMorgan Chase are increasingly providing their wealth management clients with exposure to leading cryptoassets and funds. Many of these banks have either opened or are considering opening cryptoasset trading desks as well. Established custodians, including BNY Mellon, State Street, and BNP Paribas, are expanding their services to include holding crypto keys and managing Web3 ecosystem treasuries. And the countries of El Salvador and the Central African Republic have adopted Bitcoin as a form of legal tender, in advance of a number of other countries that are considering doing the same.
Businesses are also adopting cryptoassets and making Web3 investments. As awareness about Web3 increases, established businesses are beginning to adopt cryptoassets and participate in Web3 ecosystems. For example, several publicly traded companies, including MicroStrategy, Tesla, and Square, have begun accumulating Bitcoin in their corporate treasuries. Multiple payment companies have started incorporating cryptoassets into their payment platforms and networks, including Visa, Mastercard, Square, Venmo, and American Express. Well-known brands like Samsung, Twitter, Atari, the NBA, Manchester City, Nike, Twitter, McDonalds, Reddit, PwC, and Verizon are plugging into Web3 ecosystems. Coinbase became the first crypto company to go public in 2021, with other companies poised to do so once the crypto and securities markets recover, including Gemini, BlockFi, Bakkt, Exodus, and Kraken.
Just three percent of the global population has adopted cryptoassets to date. While the number of people owning cryptoassets is estimated to have grown from about 40 million in 2017 to around 250 million in 2022, today’s figure represents a bit more than three percent of the total population.³ Outside the United States, developing countries like India, Pakistan, Nigeria, and Vietnam have the largest numbers of cryptoasset holders,⁴ perhaps driven by the alternatives cryptoassets like Bitcoin provide to their own inflation-prone currencies. On a global basis, cryptoasset holders skew toward males and younger generations.⁵
More than 30 million U.S. adults current hold cryptoassets. Representing less than 20% of the adult population, about 34 million Americans are expected to own cryptoassets by the end of 2022. Millennials and Gen Zs tend to be more likely to have adopted cryptoassets than the older Gen X and Baby Boomer generations, perhaps due to having grown up in a world of connected mobile devices and online services. Bitcoin remains the number one cryptoasset owned by Americans in 2022, followed by Ethereum’s Ether (ETH).⁶
Financial services firms, businesses, and individuals are increasingly adopting cryptoassets, but we are still early in the Web3 transition. In this chapter, we covered how financial services firms continue to invest in cryptoassets and fund Web3-related deals. Major TradFi are also venturing into Web3-related services in areas like wealth management, trading, custody, and even as legal tender for a couple of countries. At the same time, businesses are holding cryptoassets in their corporate treasuries, payment companies are incorporating crypto into their platforms, and well-known brands are plugging into Web3 ecosystems. Finally, while the number of people who own cryptoassets has grown dramatically worldwide as well as in the United States, they still represent a small proportion of the global population. We are still early in the transition from Web2 to Web3, which means you still have time to position your organization and yourself to take advantage of this evolution.
To wrap things up, let’s talk about Charting your path forward in Web3.
Monchester Macapagal and Kris Caigas of AcceleratingBiz contributed significantly to the research, writing, and production of this series.
Explore other Web3 for TradBiz insights and resources at acceleratingbiz.com.
Click on the links below to progress through the Web3 for TradBiz series:
[1] Web3 for TradBiz introduction
Web3 and crypto foundations
[2] Why embrace Web3 now
[3] Inevitable Web3 future
[4] Crypto and Web3 basics
[5] Advanced Web3 topics
[6] Using crypto wallets
Use cases and value propositions
[7] Web3 use case categories
[8] Decentralized finance (DeFi)
[9] Non-fungible tokens (NFTs) and the Metaverse
[10] Decentralized autonomous organizations (DAOs)
Web3 implications and opportunities
[11] Web3 impact on TradBiz market and business models
[12] Emerging Web3 investment opportunities
[13] Evidence of mainstream Web3 adoption
End notes:
¹ Chris Metinko, “Crypto Funding Numbers Fall During Bumpy First Half Of Year,” accessed July 24, 2022, https://news.crunchbase.com/fintech-ecommerce/crypto-funding-falls-h1-2022/.
² “Cryptocurrency Investment Fund Industry Graphs and Charts,” Crypto Fund Research, accessed July 24, 2022, https://cryptofundresearch.com/cryptocurrency-funds-overview-infographic/.
³ “Cryptocurrencies,” Statista, accessed July 27, 2022, https://www.statista.com/outlook/dmo/fintech/digital-assets/cryptocurrencies/worldwide.
⁴ “Cryptocurrency across the world,” triple A, accessed July 27, 2022, https://triple-a.io/crypto-ownership-data/.
⁵ Triple A, “Cryptocurrency across the world.”
⁶ “34 Million US adults own cryptocurrency,” Insider Intelligence | eMarketer, accessed July 27, 2022, https://www.insiderintelligence.com/insights/us-adults-cryptocurrency-ownership-stats/.
