The Incredible Growth of Bitcoin and Crypto

Bitcoin is still a strange thing to most investors.

People seem to realize the price has gone up a lot, but they’re missing what’s really going on.

Bitcoin and other cryptocurrencies are becoming widely used as stores of value. Digital gold for millions of investors who appreciate the upside and don’t trust their other options.

Let’s look at some adoption numbers.

Leading U.S. bitcoin exchange Coinbase added 1 million new accounts last month. That brings the company up to a total of 8.4 million user accounts. Around 4 million of those have been added in the past 18 months.

Coinbase is where most new U.S. users buy bitcoin with dollars, so knowing this tells us something important.

Bitcoin is undergoing viral, exponential growth. By viral, I mean it’s growing naturally as word spreads through social networks.

Growth that is both exponential and viral is a very rare thing.

Time to Pay Attention

Here’s a chart showing the number of Google searches for two things over the past year:

  • “How to buy bitcoin”
  • “How to buy stocks.”

Source: https://trends.google.com/trends/

 

This example isn’t perfect, since most people know how to buy stocks already. But it effectively shows how interest in bitcoin and cryptocurrency is spiking.

Do Cryptocurrencies Have a Use Case?

Often when I’m preaching the gospel of cryptocurrency to skeptics, they argue, “But it doesn’t get used much.”

There’s some truth there. Most people don’t like to spend their bitcoin, even though they can do so at an increasing number of places. Burger King is working on accepting bitcoin, for example. Virgin Airlines, Dell, Overstock and others have long accepted digital currency.

There are now around 300,000 bitcoin transactions per day, according to The Wall Street Journal. Many of those are fueled by the rise in initial coin offerings (ICOs), which I covered previously here.

But still, some say, bitcoin volume is a tiny fraction of Visa’s, for example.

My response to that? Huge transaction numbers are not necessary for bitcoin (and others) to succeed.

People like to save bitcoin. “Hoard bitcoin” might be a more accurate description. And that is an amazing use case by itself, considering the other (mediocre) options we currently have to store money.

A Bubble?

Bitcoin and other cryptocurrencies have had a tremendous run over the past year. Markets are currently correcting, which is completely natural after such a sprint.

It’s important to realize that even after this recent bump in adoption, only a tiny fraction of the world’s population has dipped a toe into digital assets. It’s safe to say that less than 1% of the world’s population has had any exposure at all.

Confidence is being restored to the cryptocurrency world. For years, the market languished after a hack caused the largest exchange, Mt. Gox, to declare bankruptcy back in 2014.

But during Bitcoin’s long drought from 2014 to 2016, true believers never stopped working on building and improving the network. Some of the best venture capitalists in the world invested in promising crypto companies like Coinbase. And they’re doing it right this time around. Secure offline storage and added security features are among the more notable improvements.

All that hard work is now paying off. A repeat of the Mt. Gox disaster is highly unlikely. There will be bumps along the way, but overall the uptrend remains strong.

Watch your inbox for upcoming announcements about our plans to incorporate bitcoin and other digital assets into our research services.

Good investing,

Adam Sharp
Co-Founder, Early Investing