We get all kinds of wild eyed projections taking place surrounding cryptocurrency. Recently, a conference was held where a few Venture Capital players in the crypto space were brought together. It is interesting to see how they view things.
From a financial point of view, these individuals look at things from the growth perspective. Long-term is not so much about market movements since they tend to even out over time. Short and even medium term variations in the market can happen. Yet when we look over 5+ years, markets tend to flush the non-performers out.
Cryptocurrency is certainly going to radically change the way the world operates. This is going to generate tremendous value over the next few decades. How much is hotly contested. Of course, they are all forecasts so some are apt to be wrong.
There is, however, a lot of justification for the longer term upward moves we see.
Adoption Rates
This is a hotly contested topic within the cryptocurrency community. It is hard to figure out exactly where everything stands. That said, it is evident, even from the "eyeball test", that things are getting more active. In other words, more people are coming into the space.
We see the formation of a rapidly expanding system. The combination of users, developers, and entrepreneurs is growing things at an incredible pace. There is also a large flow of investment money as entities vie for their piece of this ever growing pie.
Adoption rate can also be termed Network Effect. This is vital in the overall valuation of technological entities. We saw this with companies such as Google and Facebook.
Triple A, a Singapore based company, released a report on global cryptocurrency adoption rates. Here is what they concluded:
- India – 100.7 million
- USA – 27.5 million
- Russia – 17.4 million
- Nigeria – 13 million
- Brazil – 10.4 million
- Pakistan – 9.1 million
- Vietnam – 6 million
- Ukraine – 5.6 million
- Kenya – 4.6 million
- Philippines – 4.4 million
This amounts to roughly 190 million people. It is a number that is alignment with other estimates about what cryptocurrency usage is. Of course, we see China excluded from the list which means there could be a lot more users.
We also saw a listing as a percentage of the population.
- Ukraine 12.73%
- Russia 11.91%
- Venezuela 10.34%
- Singapore 9.04%
- Kenya 8.52%
- USA 8.31%
- India 7.30%
- South Africa 7.11%
- Nigeria 6.31%
- Colombia 6.14%
This shows how much room there is for growth. The three largest populations are China, India, and the United States. On this list, the U.S. tops with under 9% penetration rate. China is not even listed, probably due to the crackdowns in that country.
Even if these numbers are off a bit, we are seeing some massive growth and adoption rate moving higher.
The Case For $40 Trillion Market Cap
We can easily see how the value of the entire market grows as adoption rates increase. Similar to the Internet, as users start to spend time engaging, more commercial value is created. Of course, at that time, it was all locked in companies, beginning the process of an exclusionary system.
Cryptocurrency is inclusive. While many governments are moving to restrict access, the global nature of cryptocurrency makes it impossible. Also, we see a technology, at its core, that can operate on a peer-to-peer nature. That makes regulation and the attempt to stop things less effective.
Here is the video with Dan Tapiero, Mark Yusko, and Dan Morehead. They discuss different aspects of cryptocurrency along with where they think things are heading. All are career money managers running funds that are invested in the crypto space long ago.
The predictions of market cap is at 29:20.
We see the present market cap, as listed on Coingecko, at $2 trillion. This would be a 20x jump from where things are at the moment.
There is another factor to consider. We know that not everything is listed on sites like this. Many projects are not accounted for, especially when we look at the NFT world. Hence why one of the Dans was saying that the market cap was $3 trillion. It is likely there is at least another trillion dollars worth of digital assets not in the major listings.
One of the main drivers is going to be the continued adoption rates. As we saw with a game like 
Reed's Law is one of the most overlooked concepts in the cryptocurrency space. Many point to Metcalfe's Law as the theory which quantifies the Network Effect. To me, this underestimates what is taking place.
Obviously, we are now getting into the fun with numbers game. However, the key point here is to not look at the absolute numbers as much as the difference in trend. What we see is the value using Reed's Law becomes a much bigger number than under Metcalfe's. The value tied to the growth rate is much larger that most people expect.
This does seem logical when we consider it. Think of the idea of interoperability and the ability to use a node (wallet, account) in many different ways. Consider taking ETH, wrapping it, and transmitting it on another decentralized blockchain at a much lower rate. This provides access to all Ethereum wallet holders while also saving the users money AND providing more value to the token holders of the second chain.
Keep expanding this concept out over thousands of projects and we see how the valuation can really get insane.
For now, based upon the video, the $40 trillion value is done simply by keeping the existing market growth rate over the last decade. This is a sensible way to look at things. We know that Bitcoin has increased at a steady pace over the long-term. The same holds true for Ethereum. Now we are starting to see other assets join the same trend.
Perhaps this is a bit of an overestimate in the 5 years that was discussed in the video. Or maybe, it is too conservative.
What are your thoughts? Will we see a $40 trillion market cap in 5 years?
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