As more people enter the Bitcoin network, we’re seeing the adoption of a new technology in real time. But surely, adoption is more than just buying, sending or selling Bitcoin.
Bitcoin adoption also happens at a cultural level, or in the ways people position themselves in relation to one another or institutions. Different people ‘adopt’ Bitcoin for different reasons. As such, there are multiple drivers of adoption.
In this post, we take a look at 5 major drivers accelerating the adoption of cryptocurrencies across the globe.
1.People’s faith in one another is low
As you know, Bitcoin is built on the blockchain that eliminates the need for a trusted third party traditionally required to prevent double-spending. Together with the fact that transactions are put through with the use of complex math and cryptography, it means that the very first cryptocurrency was built for a world where people don’t trust each other, – and guess what, according to the data, this is exactly the world we live in. The World Value Survey shows that even though there are very large differences in levels of trust, the downtrend across the globe dominates.
For example, in the period from 1993 to 2014, the share of people agreeing with the statement “most people can be trusted” declined – interestingly, not only in the developing countries, but also in the West. Out of six countries presented on the chart, four have shown regression.
Another thing factoring into global Bitcoin adoption is that it does not lend itself well to mass surveillance, both in financial and non-financial terms. A number of countries are already working towards migrating their national currencies to digital versions or adding digital currencies as another form of currency to their total money supply, and with it the ability to get micro-detailed look into our ‘private’ lives.
Mass surveillance serves a number of different purposes and while a number of good reasons may exist, not everyone may feel comfortable and as such we can expect continued uptake of Bitcoin, alongside Central Bank Digital Currencies.
While mass surveillance is mostly associated with countries such as China, similar trends in this direction can be observed everywhere. For example, take a look at the growing amount of facial recognition patents in the U.S. It only increases moving forward.
3.BTC ETFs can be useful
Not everyone is familiar with how crypto markets work, and while on exchanges such as AAX buying Bitcoin with your local currency is very easy, many people who are used to the traditional markets may not yet be ready to engage Bitcoin directly. Some institutional investors may fall in the category as well, but in their case it has more to do with regulatory restrictions.
This is where BTC ETFs or Trust Funds come in handy because they can be purchased from investment trusts such as Bitwise Asset Management, Grayscale’s Bitcoin Trust or Wilshire Phoenix. ETFs provide an easy way for everyday stock traders and some institutions to gain exposure to Bitcoin, and so as we’re seeing ETFs being listed in more and more countries, including perhaps soon the US, we can see this development as a major driver of further growth.
In the meantime, publicly traded funds continue to thrive. Here’s a pic syphoned off from a Morningstar subscriber demonstrating three-year annualized returns on Bitcoin publicly traded funds.
4.Sanctions and weaponization of international settlement networks
Because of the political tension existing between countries, it’s nowadays easy to come across such titles on the Internet as “Act of war? Ukraine asks EU to consider cutting off Russia from SWIFT payment system as Kiev seeks more sanctions against Moscow” or “How U.S. Adversaries Are Using Cryptocurrency to Evade Sanctions”.
That being said, countries and governments literally leave Bitcoin no choice but to get adopted quicker. In the times when people might lose access to the international networks, Bitcoin stays a safe international payment system that actually has never experienced serious outages so common for traditional networks and doesn’t depend on the turbulent times of the hyperinflation or post-war crises. So, this is where crypto wins again.
5.Bitcoin is a new safe-haven asset
For years, gold has been considered a security zone. Apr.14 2020, the asset hit its highest since late 2012, soaring by nearly 2%. Yet, a month before, in the midst of the lockdown, even gold smashed to a 6-month low.
Of course, Bitcoin has also seen one of its all-time lows during that period. But what is interesting is that after the crisis and in the wake of its recent to-the-moon rally, more and more often, it gets mentioned as one of the possible safe-haven assets.
“Bitcoin vs Gold: is Bitcoin really a new safe-haven asset?”, “Bitcoin as the new safe haven” – these and other titles pop up in the media more and more often. Of course, Bitcoin still has a distance to go until it is 100% qualified to play this role, but we’re getting close.
Look at the correlation chart between gold and Bitcoin. Over the past few years it looks very strong and has recently hit a few highs that can easily strengthen the safe-haven narrative.
That brings us to the conclusion of the argument. Of course, the rise of Bitcoin in 2008 is associated with the notorious financial crisis that destabilized the world economy. It is attractive to hyper-inflating economies since it serves as the only store of value, and it speaks to privacy and anonymity that some would say are under siege globally.
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