As a venture firm that has been deploying capital to the crypto space for over 6 years, we see a plethora of future catalysts for crypto adoption but we often circle back to the question: What would be the biggest catalysts?
We tend to think that the biggest potential catalysts will have three primary ingredients:
1. A link between crypto and where capital resides today
2. A familiar form factor to minimize adoption friction
3. A highly engaged international user-base
As we take stock of all the various efforts in progress from startups, to tech giants, to banking behemoths, we couldn’t be more encouraged by what’s on the horizon over the next 12–24 months. We count multiple strategic developments materializing that, together, solve for all three ingredients.
In short, we think we’re about to witness the emergence of the biggest crypto on-ramps that have ever been established.
More specifically, the two trends we’re watching here are fiat coins (“crypto USD”) and social media networks (e.g. Facebook’s secretive project). In short, fiat coins bring the capital link and familiar form factor while social media giants bring their vast, highly engaged user-bases.
If you’re not familiar, “fiat coins” are digital coins that are issued on a public blockchain like Bitcoin or Ethereum that are backed or collateralized with traditional currencies like USD, EUR, or JPY.
In many ways, these coins are the crypto equivalent of “putting magazines on the internet” — still, they’re useful in that they provide a familiar, unintimidating form factor. In that sense they’re a helpful stepping stone (or gateway drug) to the full potential and capabilities of crypto.
While models of fiat coins have existed for years, two aspects — trust and convenience — are changing. First, they’re increasingly issued from more trusted originators and, second, they’re moving closer to where capital resides today (at financial institutions) — making it quicker and easier to move from USD to digital, blockchain-based USD.
And while it’s one thing to provide a direct link to capital and a familiar form factor, users need a reason to do so. A scaled user-base would go a long way to accomplishing this — once the majority of your network is onboard, there’s greater utility in the ability to quickly zap money around the world.
Social media behemoths are catalyzing this shift today: Facebook, Telegram, Kakao, and Signal (to name a few) are all introducing their user-bases to crypto. This sets the stage for massive growth in the number of crypto users.
It’s a virtuous cycle: As more users onboard to crypto, more developers build more incredible things to do with programmable money which drives more users and more capital to the industry. The net result is more growth. And a lot of it.
To help put things in perspective: It took 10 years for crypto to grow to its current user-base of roughly 100 million. The new projects that are currently in progress from major social media and messaging companies could introduce crypto to as many as 3 billion additional users.
In reality considering that many users likely have accounts on multiple services, those 3 billion users probably amount to closer to 1 or 2 billion unique users. Admittedly, it would be an excessively tall order to expect every user of these messaging applications to adopt crypto, even if it is natively introduced to the app.
Still, even if we assume a unique user-base of 1.5 billion across projects currently in progress (or rumored to be), it would only take a 7% adoption rate to more than double the number of crypto users over the next couple years.
Importantly, what initially attracts these new users to crypto may not be the same as what retains them. For example, Telegram’s native currency TON may serve as an on-ramp to crypto but, once users have TON, it will be easy to exchange it for other cryptoassets with a stronger value-prop and more established track record — and it’s likely that some non-negligible percentage of users will actually do so.
This type of rapid growth will have a profound impact on the crypto industry — and it’s one of the reasons I’m particularly excited to be actively deploying capital with passionate founders that are pushing the frontier of programmable money.
Together, these leaders are building the pieces necessary to support the next financial system — a more global, equitable and inclusive financial system that enables people to transact freely with one another without artificial constraints from lines on a map (country boundaries).
I’d expect established global networks like Bitcoin and Ethereum to benefit substantially from these new onramps.
Ultimately, Bitcoin and the crypto ecosystem have a strong value proposition that will continue to attract users over time regardless of whether large incumbent tech or financial companies catalyze adoption. However, it’s hard to imagine anything that will be as additive to short-term adoption as the fate of these projects — any one of which could significantly accelerate the crypto adoption curve.
In the end, the outlook is bright: Greater adoption means more financial freedom for all users — something we can all get onboard with.
Disclosure: I own Bitcoin personally and have financial exposure to Bitcoin, the crypto industry, and other crypto assets via Blockchain Capital’s venture funds.