The last three years have seen an explosion in cryptocurrency popularity.
While we experience a worldwide downturn in economic productivity and a ‘crypto winter’, which has seen markets in steep decline this year, the popularity of digital assets cannot be denied.
In the past three years, the cryptocurrency market grew by 500%. So what is attracting people to crypto and convincing people to invest?
Cryptocurrency Popularity
The underlying technology behind Bitcoin and other digital assets is distributed ledger technology (DLT). This relatively broad term describes the nature of the networks which provide the foundations upon which all cryptocurrencies are built. With variations on the theme, most digital assets are simply consensus-driven networks that are decentralised in nature. That means they do not have a single point of failure. The significant benefits of this type of infrastructure design are scalability, security, speed, and, of course, much lower costs.
With this in mind, cryptocurrency popularity, and the commercial and investment interest shown in DLT-driven networks, begins to emerge. The application of this nascent technology is enormous. From financial management to personal verification, the opportunities for adopting distributed consensus-driven networks are extensive.
As we progress through the decade, the need for alternative forms of infrastructure has never been greater. When you consider the vulnerability of traditional forms of investment, it is easy to see why Bitcoin is emerging as an alternative store of value for some and cryptocurrency popularity has increased.
More Choice
Bitcoin, like many other digital assets, is increasingly viewed as a safe hedge against rising rates of inflation. Furthermore, unlike traditional stocks or investment vehicles such as property or gold, digital assets provide investors with numerous options when it comes to making investment decisions. For example, a cryptocurrency investor can choose whether to stake their digital assets, provide liquidity or farm for yield on a decentralised exchange, or simply trade or hold in a traditional manner, as many successful investors have done throughout history.
From a practical point of view, access to cryptocurrency has multiplied tenfold in recent years. Once what was a niche area of technology has grown into a multi-billion dollar industry. I think it is safe to say that the majority of recent crypto evangelists were attracted by stories of huge returns on initial investment.
This ‘get rich quick’ attitude has fuelled an entire industry looking to provide methods to purchase, trade, or simply store digital assets and goes some way to explain the enormous rise in interest. Super apps from the likes of PayPal, Revolut, and Robinhood, to name just a few, are bringing crypto to the masses like never before.
Crypto Celebrity
The rise in public engagement is further evidenced by the placement of crypto sponsorship at large-scale sporting events such as Formula 1 and Premiership football. Manchester United and the Mercedes F1 team are sponsored by some of the biggest names in crypto today. Popular celebrity endorsements of various crypto-centred products from the likes of Tom Brady, Gwyneth Paltrow, and Matt Damon have also helped spur interest.
Mark Zuckerberg is a huge proponent of the Metaverse – having renamed his business after it – and the potential for adopting virtual worlds. This broad celebrity endorsement acts in a subtle way to legitimise the technology.
Cryptocurrency Popularity to Continue?
Despite the current market conditions, it is a widely held belief that bearish environments do not last forever.
