Why hasn’t crypto achieved mass adoption yet?

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

Although the concepts of blockchain, cryptocurrencies like Bitcoin and Ethereum have successfully penetrated global public awareness, most people have never actually used crypto services. This may be due to five main reasons: 1) limited access for institutional funds, 2) limited access for ordinary users, 3) lack of investment targets that appeal to the general public, 4) difficulties for most developers to enter the field, and 5) infrastructure limitations for large-scale applications.

However, there are some signs in this bear market that are exciting and conducive to faster mass adoption of cryptocurrencies.

1. Bitcoin Spot ETF: Opening the entry channel for traditional funds, with the potential to introduce billions of dollars

On August 11th, the U.S. SEC extended the review time for the Bitcoin spot ETF applications from Ark Investment Management and 21 Shares. However, there is great optimism about the prospects of the approval of a Bitcoin spot ETF. Mike Novogratz, the CEO of Galaxy, mentioned in the company’s earnings conference call that there are “internal messages” from BlackRock and Fidelity suggesting that the approval of a Bitcoin spot ETF is only a matter of time and may be approved within “four to six months”.

Once the Bitcoin spot ETF is listed, investing in Bitcoin will become easier. The U.S. stock market is dominated by institutions, with institutional investors, represented by mutual funds, accounting for 55% of the market. The push for SEC approval of a Bitcoin spot ETF is mainly driven by several mutual funds. Therefore, the listing of a Bitcoin spot ETF may not only attract potential investors from mainstream stock markets such as Nasdaq, NYSE, and CBOE, but more importantly, it will facilitate the entry of large-scale institutional funds.

How much funding can the listing of a Bitcoin spot ETF bring? According to NYDIG’s statistical analysis, the current assets under management of Bitcoin-related products (including Grayscale Bitcoin Trust, Bitcoin futures ETFs, and Bitcoin spot ETFs in other countries) amount to $28.8 billion. This data only includes the assets under management of publicly available products. Based on this, NYDIG believes that the listing of a Bitcoin spot ETF may bring about $30 billion in new demand.

2. LianGuaiyLianGuail USD Stablecoin: The entry channel for ordinary users has already opened, with the potential to attract tens of millions of new users

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

On August 8th, LianGuaiyLianGuail launched the LianGuaiyLianGuail USD (PYUSD) stablecoin for transfers and payments on the Ethereum platform. The stablecoin is issued by LianGuaixos Trust ComLianGuainy and is backed 100% by deposits in US dollars, short-term US government bonds, and similar cash equivalents. LianGuaiyLianGuail has become the first large fintech company to embrace digital currency for payment transfers.

Eligible LianGuaiyLianGuail customers will be able to transfer PYUSD between LianGuaiyLianGuail and compatible external wallets, use PYUSD for peer-to-peer payments, choose PYUSD for merchant payments during checkout, and exchange PYUSD for other cryptocurrencies supported by LianGuaiyLianGuail. Jose Fernandez da Ponte, Vice President of LianGuaiyLianGuail, stated in an interview that at present, PYUSD can only be obtained through the LianGuaiyLianGuail wallet, but their goal is to make PYUSD available on major centralized trading platforms.

LianGuaiyLianGuail’s vision is to become a channel between fiat currency and Web3, enabling mainstream adoption of stablecoin payment systems. In this regard, compared to existing USD stablecoins in the crypto industry (such as USDT and USDC), LianGuaiyLianGuail USD has a natural advantage in terms of adoption, leveraging its 400 million monthly active users to potentially introduce millions of new users to the crypto market.

III. RWA Trend: RWA is the entry point for traditional institutions to participate in building Crypto

In the past six months, RWA has become a hot topic in the market, and there have been intense discussions about RWA in the community.

Supporters believe that RWA will introduce real-world assets and income, significantly increasing the asset size of Crypto. In terms of tokenizing off-chain RWAs and clearing and settlement, although it is not possible to achieve complete trustlessness like Crypto Native Assets, there are clever clearing and settlement mechanisms based on collateral, pledge, arbitrage, and gaming. This indeed creates more connections between Crypto and the real world, especially in DeFi lending protocols, which benefit from the high interest rates of US government bonds during the Federal Reserve’s interest rate hike cycle, and have found a business model for generating “risk-free” continuous income in the short term.

Opponents argue that most RWA projects still rely on centralized trust for “compliance” and “audit,” and cannot achieve complete trustlessness, which goes against the spirit of Crypto. At the same time, the best direction for RWA development now is the tokenization of US government bonds based on DeFi lending protocols. The high yield of government bonds as underlying assets actually indicates high inflation expectations, suggesting that it may be more appropriate to hold “Crypto digital gold” like Bitcoin, which has the phrase “The Chancellor of the Exchequer is standing on the edge of the second round of bank rescues” written in the genesis block.

In late March, we also published an article about RWA, where we believed that RWA could be the next engine for DeFi. Of course, we still feel that there are opportunities in the RWA direction. During bear markets, we often hear various opinions in the industry, such as “no new asset targets”… If that’s the case, and traditional institutions are showing signs of entering and laying out in the crypto market, we cannot completely ignore RWA in the next cycle, especially if it is a bull market driven by traditional large institutions and capital.

RWA may be the first entry point for traditional institutions to participate in the co-construction of Crypto. Just like LianGuaiyLianGuail, which enters Crypto with the stablecoin PYUSD pegged to the US dollar, it is actually an RWA with “risk-free” US Treasury bond returns. However, it does not currently distribute returns to PYUSD holders, but in the future, “interest-bearing stablecoins” may become mainstream projects.

When we look at some project decks, we often see visions like “revolutionizing certain things”. Perhaps this cycle needs to give traditional institutions some time, perhaps they have seen opportunities and have already made up their minds to undergo self-revolution through blockchain and Crypto.

IV. Chains that support multiple programming languages: Expected to attract millions of Web2 developers

In the industry, there are currently two logics running simultaneously for Web3 programming languages.

One is the exploration of new languages that have unique advantages for certain new application scenarios. For example, the Cairo language that is more friendly to ZK Applications, the Move language that is more friendly to formal verification, and the DeepSEA functional programming language that prioritizes security.

The other is chains that support multiple programming languages, such as zkSync, Risczero, VRRB, which are conducive to the entry of millions of Web2 developers into Web3. To attract more developers to develop and create applications in the ecosystem, current Layer1 and Layer2 need to offer high hackathon rewards and ecological investment funds to attract a very limited number of developers. Supporting multiple programming languages in blockchain has great advantages in attracting more Web2 developers, considering that there are only hundreds of thousands of Web3 developers, while there are over 10 million Web2 developers. This also makes it more possible to build a more prosperous ecosystem and capture more value.

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

V. Infrastructure is about to be ready, and large-scale blockchain applications are expected to emerge

At the 2017 Shanghai Summit, when asked why there are no truly large-scale blockchain applications, Vitalik attributed it to “technical barriers” being the most important factor hindering the large-scale application of blockchain. He also stated that the most urgent task is to improve the scalability of blockchain.

After many years, the Ethereum ecosystem has developed a thriving Layer2 scaling matrix for scalability. Layer2 solutions such as Optimism, Arbitrum, StarkNet, zkSync, Polygon, Scroll, Taiko, etc., will significantly improve the performance compared to Ethereum Layer1.

In addition, modular blockchain is also experiencing rapid development. Projects such as Celestia, Polygon Avail, Rooch, etc. may provide support for large-scale blockchain applications in their respective fields.

In summary, compared to previous cycles, the development of Crypto Infra in this cycle has improved significantly, and it is possible to support the emergence of large-scale blockchain applications.

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