How far are we from mass adoption of cryptocurrencies?

The mass adoption of a new technology takes a long time. In the United States, it took 78 years for automobiles to achieve a 92% penetration rate, and it took 48 years for household electricity to achieve a 100% penetration rate; it took 26 years for the Internet to achieve an 88% penetration rate.

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The time required for these technologies to be adopted on a large scale is getting shorter and shorter, but why the concept of blockchains such as Bitcoin and Ethereum and Crypto have clearly penetrated into the global public consciousness, but most people have never actually used Crypto? service? It may mainly include five reasons: first, institutional capital access channels are blocked; second, ordinary users have no access channels; third, there is a lack of investment targets that meet the public's taste; fourth, it is inconvenient for most developers to enter the industry; fifth, Infra cannot support large-scale application.

But what is exciting is that there are some signs in this bear market, which is conducive to the faster realization of Mass Adoption by Crypto.

1. Bitcoin spot ETF: The entry channel of traditional funds is about to open, and it is expected to introduce tens of billions of funds

On Aug. 11, the U.S. SEC extended the review period for the bitcoin spot ETF applications of Ark Investment Management and 21 Shares. However, everyone is very optimistic about the prospect of the approval of the Bitcoin spot ETF. Galaxy CEO Mike Novogratz said in his earnings conference call that there are "internal information" from BlackRock and Invesco, and that it is only time for the Bitcoin spot ETF to be approved. issues, it could be approved "within four to six months".

Investing in Bitcoin will become easier after the Bitcoin Spot ETF is listed. The U.S. stock market is dominated by institutions, and institutional investors represented by mutual funds account for 55%. Now, it is mainly promoted by several mutual funds that are seeking SEC approval for Bitcoin spot ETF. Therefore, after the Bitcoin spot ETF is listed, it may not only bring potential investors in several mainstream stock markets such as Nasdaq, New York Stock Exchange, and CBOE, but more importantly, it will facilitate the entry of institutions with large capital scales.

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If the Bitcoin spot ETF is listed, how much capital will it bring? According to NYDIG statistical analysis, the current Bitcoin-related products (including Grayscale Bitcoin Trust, Bitcoin Futures ETF, and Bitcoin Spot ETFs in other countries), the assets under management of these Bitcoin products have reached 28.8 billion US dollars. This data only counts the funding scale of the publicly disclosed products. Based on this, NYDIG believes that after the listing of Bitcoin spot ETF, it may bring new demand of 30 billion US dollars.

2. PayPal USD Stablecoin: The entry channel for ordinary users has been opened, and it is expected to introduce tens of millions of new users

PayPal is one of the most well-known global mobile payment companies, covering 202 countries and regions, supporting 24 currencies, millions of companies accept Paypal as a payment method, and over 400 million monthly active users worldwide.

On August 8, PayPal launched PayPal USD (PYUSD), a USD stablecoin for transfers and payments on Ethereum. Issued by Paxos Trust Company, the stablecoin is 100% backed by U.S. dollar deposits, short-term U.S. Treasury bills, and similar cash equivalents. PayPal has become the first major financial technology company to embrace digital currency payment transfers.

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Eligible PayPal customers will be able to transfer PYUSD between PayPal and compatible external wallets, and can use PYUSD for peer-to-peer payments; they can also choose PYUSD to pay merchants at checkout; users can also switch between PYUSD and PayPal supported cryptocurrencies do exchange. Jose Fernandez da Ponte, vice president of PayPay, said in an interview that PYUSD is currently only available through the PayPal wallet, but the goal is to make PYUSD available on major centralized trading platforms.

PayPal's vision is to be the conduit between fiat currencies and Web3, enabling mainstream adoption of stablecoin payment systems. In this regard, compared with the existing US dollar stablecoins (USDT, USDC, etc.) in the Crypto industry, PayPal USD has a natural advantage in the out-of-the-circle effect. Relying on PayPay's 400 million monthly active users, it is expected to introduce tens of millions of new coins to Crypto. user.

3. RWA upsurge: RWA is the starting point for traditional institutions to enter and participate in the joint construction of Crypto

In the past six months, RWA has become a hot topic in the market, and the community discussion on RWA is very intense.

Supporters believe that RWA will introduce real-world assets and income, which will greatly increase the asset size of Crypto. In terms of off-chain RWA tokenized on-chain and clearing and settlement, although there is no way to achieve complete trustless like Crypto Native Assets, there is also a more ingenious clearing and settlement mechanism based on guarantee, pledge, arbitrage and games. Indeed, Crypto has more connections with the real world, especially the DeFi lending agreement, benefiting from the high interest rates of U.S. Treasury bonds in the Federal Reserve’s interest rate hike cycle, at least in the short term, it has found a business model to obtain "risk-free" continuous income.

Opponents believe that most RWA projects actually still have centralized trust in "compliance" and "auditing", and there is no way to fully realize Trustless, which does not conform to the spirit of Crypto. At the same time, the best direction for RWA to develop now is the tokenization of U.S. treasury bonds based on the DeFi lending agreement. The high yield of treasury bonds, the underlying asset, just shows that inflation expectations are high. The chancellor is on the brink of a second bailout of the banking sector" Bitcoin, the "Crypto digital gold".

We also published an article on RWA at the end of March, when we thought that RWA might be the next engine of DeFi. Of course, I still feel that there will be some opportunities in the direction of RWA. In the bear market, we often hear various opinions in the industry, "there is no new asset target"...Since this is the case, it coincides with the traditional institutions showing signs of entering the crypto market. If the next cycle is driven by large traditional institutions and large funds Bullish, we cannot completely ignore RWA.

RWA may be the first starting point for traditional large institutions to participate in the joint construction of Crypto. Just like PayPal, the U.S. dollar stable currency PYUSD is used to cut into Crypto, which is actually a kind of RWA with "risk-free" U.S. Treasury bond income, but at this stage no income is distributed to PYUSD holders, and there may be "interest-bearing stable currency" in the future into a mainstream project.

When we look at some project decks, we often see a vision similar to "revolutionary life". Maybe this cycle needs to give traditional institutions a little time, maybe they see the opportunity and have made up their minds to revolutionize themselves through blockchain and Crypto.

4. A chain that supports multiple programming languages: it is expected to introduce millions of Web2 developers

For the Web3 programming language in the industry, two logics are running at the same time.

One is the exploration of new languages that have unique advantages in some new application scenarios. For example: the Cairo language that is more friendly to ZK Application, the Move language that is more friendly to formal verification, and the DeepSEA functional programming language that puts security first.

The other is chains such as zkSync, Risczero, and VRRB that support multiple programming languages, which will help millions of Web2 developers enter Web3. In order to attract more developers to develop and create applications in the ecology, the current Layer1 and Layer2 need high hackathon rewards and ecological investment funds to attract a very limited number of developers. If the blockchain supports multiple programming languages, it will have a great advantage in attracting more Web2 developers. After all, there are only a few hundred thousand Web3 developers, while there are more than 10 million Web2 developers. This is also more likely to create a more prosperous ecology, so as to capture more value.

We all recognize these two logics, and both are beneficial to the development of the industry.

5. The infrastructure is about to be ready, and large-scale blockchain applications are expected to be born

At the Shanghai Summit in 2017, Vitalik concluded that "the most important factor hindering the large-scale application of blockchain is technical barriers" to the question "why we have not yet had real large-scale blockchain applications". And said that the top priority is to improve the scalability of the blockchain.

After many years, the Ethereum ecosystem has developed a prosperous Layer 2 expansion matrix for scalability. Layer 2, such as Optimism, Arbitrum, StarkNet, zkSync, Polygon, Scroll, Taiko, etc., will have significantly improved performance compared to Ethereum Layer 1.

In addition, the modular blockchain aspect is also ushering in rapid development. Projects such as Celestia, Polygon Avail, and Rooch have the potential to provide support for large-scale blockchain applications in their respective fields.

In short, compared with the previous cycles, the development of Crypto Infra in this cycle has been greatly improved, and it is possible to support the birth of large-scale blockchain applications.