The State Of Global Crypto Adoption

Adoption is the key for cryptocurrency. As we talk about over and over, if the big money uses it, we’ll all use it. There is no doubt institutional money is interested, as are family offices which contain trillions in family wealth.

The SWIFT system recently partnered with Chainlink on cross-chain protocol. SWIFT is the U.S. backed and member owned financial network that moves the majority of global commerce and finance around the world. They are integral to the global economy.

What SWIFT is doing is building a smarter network for incorporating crypto into global commerce. Here’s why according to SWIFT Strategy Director Jonathan Ehrenfeld Solé:

“There is undeniable interest from institutional investors in digital assets. Whether these are stablecoins, CBDCs or anything you can tokenize in the capital market space. So that could be equitiesbonds or anything else.”

In other words, the big money is buying up Bitcoin and other blockchain related assets during this “crypto winter” in anticipation of the next summer.

The adoption curve?

Source: Finoa.io

Bitcoin Adoption Still On Its Early Phases

As seen in the chart below, there are 4 phases in the adoption curve comprised of innovators, early adopters, early majority, late majority, and laggards. According to Levin.

Diffusion of Innovations Theory Adoption Curve

  1. Innovators: “Innovators are adventurous and willing to take risks. They fundamentally want to be the first to try new things. Their goal is to explore new technologies or innovations and find opportunities to be an agent of change.”
  2. Early Adopters: “Once the benefits of a new innovation start to become apparent, early adopters leap in. Early adopters buy new technology to achieve a revolutionary breakthrough that will give them a dramatic competitive advantage in their industry. They love getting an advantage over their peers and they seem to have time and money to invest.”
  3. Early Majority: “The mainstream early majority typically values innovations that solve a specific problem. They look for complete products that are fully tested, adhere to industry standards, and are used by others they know in their industry. They are looking for incremental, proven ways of doing what they already do.”
  4. Late Majority: “The late majority is risk averse and only adopts new innovations to avoid the embarrassment of being left behind.”
  5. Laggards: “Laggards hold out to the bitter end. They value traditional methods of doing things and refuse to adopt a new technology until they are forced to through obsolescence of their former system.”

Source: Michael Levin

What Countries are Leading?

The 2022 Global Crypto Adoption Index Top 20

CountryOverall index rankingCentralized service value received rankingRetail centralized service value received rankingP2P exchange trade volume rankingDeFi value received rankingRetail DeFi value received ranking
Vietnam155276
Philippines24466135
Ukraine366391014
India4118211
United States53311132
Pakistan61010502216
Brazil77711387
Thailand812126153
Russia9881091112
China102214464
Nigeria111818172017
Turkey12991211915
Argentina131313262125
Morocco141919213318
Colombia152323102729
Nepal161717193441
United Kingdom171414711211
Ecuador18373764556
Kenya1943435934
Indonesia2016161291813

Source: Chainanalysis

Who Owns The Most Bitcoin

Satoshi Nakamoto not only invented, but also kickstarted Bitcoin, by being the first miner to create blocks of transactions. It is estimated that Satoshi mined more than 22,000 blocks starting from January 3rd 2009, and received more than one million bitcoin in cumulative block rewards for his work. As a result, Satoshi is estimated to hold the largest bitcoin cache, more than 1 million BTC, valued at approximately $23 billion today. This bitcoin is not stored in one address, but spread across those roughly 22,000 addresses. None of it was ever spent besides a few test transactions. Satoshi left the project in 2010 and hasn’t been heard from since.

As of June 2022

Source: River.com

As of Oct 2022

Source: Kevin Rooke

How Bitcoin Wealth is Distribution

Over time, bitcoin ownership has become distributed in strata based on total bitcoin wealth. These categories are based on the total number of bitcoin located at an address.

The amount of bitcoin that each stratum of addresses owns in relation to the entire bitcoin supply fluctuates over time. Today, only five bitcoin addresses contain 100,000 – 1,000,000 BTC for a total of 778,627 BTC. The next 92 largest owners, who range from 10,000 – 100,000 BTC, own a total of 2,169,396 BTC. These wealthiest 97 addresses account for 14.15% of the total supply. Bitcoin addresses with 10,000 or more bitcoin are sometimes referred to as whales.

Total Bitcoin Supply

There can never be more than 21 million bitcoin. For that reason, percent ownership of the total bitcoin supply can be safely calculated using the hard cap of 21 million.

However, some models use the total supply of bitcoin excluding the more than 1,000,000 BTC that Satoshi Nakamoto received in block rewards and the estimated 3-4 million coins that are lost forever. This places the total supply of bitcoin closer to 18 million rather than 21 million. Regardless of the model used, there is a strict upper limit on the number of bitcoin that will ever exist. Therefore, all bitcoin owners can be confident that their share of bitcoin will never be diluted below a certain percentage.

Who are the Bitcoin Billionaires

Not including Satoshi, five bitcoin addresses contain more than 100,000 bitcoin each. The five addresses with the most bitcoin belong to Binance, Bitfinex, MicroStrategy, and another address, whose identity is unknown. These five addresses collectively own more than 778,000 bitcoin. The exchange addresses represent the holdings of many individual investors who are not holding their own keys.

What Companies Hold the Most Bitcoin

Companies can use corporate savings, called a treasury, to buy bitcoin. The benefit of this strategy, employed by companies such as Microstrategy, Tesla, and Galaxy Digital Holdings, is to protect their savings against inflation and negative-yield bonds.

Large corporations who can issue corporate bonds with low interest rates also have the opportunity to create cheap debt and use the funds to purchase bitcoin. In theory, as the dollar’s value decreases with inflation and bitcoin continues to store value, paying off fiat debt will require fewer bitcoin. This strategy is similar to buying on margin or using leverage.

The largest Entity which is a trust called Grayscale Bitcoin trust with 644, 310 bitcoin which I’ve had buy out on GBTC since $18,600 to inate a full a allocation. P.S. Its currently sell at -34% premium to spot however, at some point the SEC will be forced to treat it equally and at that point holders will be up what discount it is selling for at the time.

What Public Companies Own the Most Bitcoin

Collectively, public companies own more than 216,038 BTC, equal to 1.029% of the total supply. The ten public companies holding the most bitcoin on their balance sheet hold nearly 200,000 BTC total.

Microstrategy, led by Michael Saylor, holds more bitcoin than any other public company. Microstrategy has acquired more than 131,000 BTC, which represents roughly 0.689% of the total supply. Microstrategy has purchased bitcoin with both their corporate treasury and through bond offerings. These bonds have an extremely low interest rate and can be redeemed either for equity in Microstrategy or for fiat. This tactic allows Microstrategy to acquire bitcoin cheaply and beyond the capacity of their corporate treasury.

Tesla, Inc. holds than 10,800 BTC, a 0.051% share of the total supply, after previously selling over 31,000 BTC. The third-largest bitcoin holding by a public company is Galaxy Digital Holdings, which owns 16,400 BTC.

What Private Companies Own the Most Bitcoin

Private companies own roughly 174,068 BTC, about 0.829% of the total supply. Block.one, a Chinese corporation, is the largest private owner of bitcoin. Block.one reportedly owns 140,000 BTC, representing 0.667% of the total supply.

What Governments Hold the Most Bitcoin

Governments across the world own an estimated 259,870 BTC, representing 1.237% of the total supply. Reports claim that Bulgaria holds more than 213,519 BTC, and members of the Ukrainian government privately hold roughly 46,351 BTC. The United States government sold bitcoin recovered from the Silk Road in 2015 that would have been worth several billion dollars today, and they currently hold another cache of almost 70,000 BTC, which they are expected to sell in the near future. The U.S. Marshals Service auctions bitcoin seized by the FBI and other government agencies on its website. (RiverFinancial)

Indirect Bitcoin Exposure

Indirect bitcoin exposure is one investment method for investors seeking to gain exposure to the bitcoin price without directly purchasing bitcoin. Some investors also believe they can reduce risk by investing in an extensive portfolio with many bitcoin-related assets. A Bitcoin exchange-traded fund (ETF) may contain equities and other bitcoin-related assets that result in a more diversified portfolio. Bitcoin ETFs track the price of bitcoin, albeit imperfectly. Some proposed ETFs are based on bitcoin futures and other derivative products.

ETFs own a combined 816,379 BTC, 3.88% of the total bitcoin supply. The largest bitcoin ETF is Grayscale Bitcoin Trust (GBTC), which owns 654,600 BTC, or nearly 3.2% of the total supply. In total, ETFs, public and private companies own almost 1.5 million BTC, more than 7% of the total supply.

Source: Kudo’s to River.com for putting together some extraordinary detail.

Future Global Adoption

I think is fair to say we are on cusp of mass adoption as Cryptocurrency adoption has taken off more recent months and major funds seek to get position to become the largest holder. However, the global crypto ownership remains relatively low and has to some degree stalled out as inflation and higher rates take hold. However, we still see bright spot that are still picking up, led by specific regions.  

According to data acquired by Finbold, about 10.2% of the global population using the internet owns some form of cryptocurrency (as per a survey carried in Q3, 2021 and published on January 26, 2022). Thailand accounts for the highest share at 20.1%, followed by Nigeria at 19.4%, a similar percentage to Philippine users. United States users rank in the 14th spot with a share of 12.7%.

Elsewhere, the ownership is more contracted among individuals aged between 25-34 years, with males accounting for 15.5% while the female share stands at 9.5%. Internet users aged 16-24 years saw males account for 13.3%, while female owners stood at 6.4%. Overall, most crypto ownership is concentrated among individuals aged between 16-44 years. Data on cryptocurrency ownership is provided by the global digital insights platform DataReportal.

Summation

In Closing, we are a little over 6.2% adoption rate globally as of this writing of this article. I’m going to use Levin’s work as my model. That said we should reach 10% adoption rate by no later 2030 or as soon as 2025+ with empowering regulation in the US with some Central Bank Digital Currency (CBDC) attached to Blockchain. However, that notion seems early for me. It’s my understanding that we are looking at stand alone CBDC at this point by US regulators. Anyway, the key metric to mass adoption is getting family offices on board and larger pension funds which requires some form of regulation to make that leap to 10%. At that point I can’t imagine were are not above $100K Bitcoin or higher especially if Elon Musk with Starlink and AST SpaceMobile Inc are successful at High-speed, low-latency broadband internet in remote and rural locations across the globe were talking about a adoption revolution.

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