Crypto Adoption Rate Similar To 1990s Internet Boom, Says Wells Fargo Report

The adoption rate of cryptocurrencies is similar to that of other advanced technologies such as the internet, electricity and automobiles, among others, according to a report titled ‘Understanding Cryptocurrency, by Wells Fargo Investment Institute, a US-based financial company.

At present, there are over 990 million crypto investors around the world, as per data by Crypto.com and World Bank.

Similarity In Adoption Rate

The internet technology, the report points out, saw this phase in the mid-to-late 1990s. “After a slow start in the early 1990s, internet use surged from 77 million in 1996 to 412 million in 2000. By 2010, worldwide internet use had grown to 1.98 billion, and today it sits at 4.9 billion,” said the report.

The report expects cryptos to chart a similar growth path based on the similarity in the first few years. The growth of cryptos since 2014 till now is similar to the growth in internet in the 1990s.

“If this trend continues, cryptocurrencies could soon exit the early adoption phase and enter an inflection point of hyper-adoption,” said the report.

Regulatory Support A Stumbling Block

What cryptocurrencies need now is regulatory support. “Lack of a regulatory structure is an important roadblock to be removed, as it was cited as the number one reason in a 2020 Bloomberg survey why high net worth investors were unwilling to invest in cryptocurrencies,” said the report.

In India, though the government is considering bringing in a regulation for cryptocurrencies, nothing has happened on that front yet. However, the Union Budget 2022 announced steep taxation for cryptocurrency transactions in India, creating another roadblock for its adoption.

According to a Chainanalysis report for 2021, India has the second-highest number of cryptocurrencies users around the world. Industry estimates suggest there are 10-15 million crypto investors in India.

Word Of Caution

The findings of the report show that cryptocurrencies are highly volatile.

“Bitcoin is the oldest and arguably one of the least volatile cryptocurrencies, but it is still roughly four times more volatile than gold and a basket of global equities,” said the report.

It goes on to say that the investment space is till new and “early-stage investing is often fraught with violent boom and bust cycles, as many a dot-com company and investor can attest from 20 years ago”.

“More than 16,000 cryptocurrencies exist today, and if history is any guide, many will fail (or at least fail to scale),” the report adds.  The report also refers to the shakeout event in 2017, when more than 1,700 cryptocurrencies (40 per cent at the time) went bust and warns that there may be similar events in the future as well.