The perks of the world where 40% of the adult population owned crypto

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Back in June, Security.org released some pretty eyebrow-raising findings in the crypto world. Their new data found that 40% of American adults now own crypto, a significant increase from last year. What’s more, it appeared to be a sustained increase. Crypto ownership is up among women, and a large portion of those who don’t (21%) are more likely to invest in an approved U.S. Bitcoin (BTC) exchange-traded fund.

There are a few caveats to remember here. This data is based on two relatively small surveys (1,001 and 504 people, respectively) and, because they were conducted online, may be misrepresentative of the entire U.S. population. The Federal Reserve listed only seven percent of U.S. adults as crypto investors in 2023, which would have a much larger sample size. However, given that participants were only recruited from those who agreed to participate in Ipsos’s KnowledgePanel, their data may also be misrepresentative.

It got me thinking about whether the Security.org figure is realistic. What if 40% of the world’s adult population (about 5.75 billion people) had crypto, not just the US? I’ve had this idea floating around in my head for a few months now. It both surprises and excites me. Here’s what came to mind.

There will be four main categories of change:

● Individual economy.

● Financial systems.

● Technological and social patterns.

● Environmental policy.

Come with me on this thought experiment. Something not so far-fetched could be the way things go.

Individual economy

One of the most prominent benefits of cryptocurrency is its potential to provide financial services to the unbanked or underbanked.

Take the Philippines for example. Despite 66% of their population being unbanked, crypto adoption is on the rise. More than 13% (or around 15.8 million people) own crypto, and the government is rapidly working to launch a central bank digital currency to meet demand.

Over $33 billion in cash remittances are being sent home from Filipino workers abroad, another excellent use case for crypto. Traditional banking systems, which are often inaccessible or inconvenient for citizens in developing regions, will find a formidable competitor in blockchain-based financial services if adoption continues to grow.

Cryptocurrency can act as a financial equalizer, bridging gaps that have long excluded large segments of the population from economic participation.

Volatility and risk

Cryptocurrencies are notoriously volatile, which can pose significant risk to the underbanked. But if 40% of the world were to invest, that volatility would likely decrease. As more people join the market, the liquidity of crypto assets will increase, making it harder for any single transaction, even from whales, to significantly affect prices.

An asset that is more widely held and traded tends to have smoother price movements as the effects of large buys or sells are diluted. As adoption increases, we can predict that cryptocurrencies may become (to some extent) stable and their value will become more predictable over time.

Investment patterns

With nearly half of the adult population owning cryptocurrencies, traditional investment paradigms will change. A significant portion of personal savings could be directed toward digital assets rather than traditional investments like stocks or mutual funds. Diversification will have a completely new meaning; traditional portfolios will include a mix of stocks, bonds, and digital assets.

Financial systems

The massive shift in investment models will inevitably disrupt traditional financial markets. As more people are not investing in digital assets, a significant portion of the capital that could otherwise be invested in traditional stocks and bonds will instead flow into the crypto ecosystem.

This divergence could lead to liquidity challenges for traditional markets, increased volatility, and shifts in valuations as investor attention is divided. IPOs will likely be structured differently, and some companies will offer ICOs as a replacement for or in support of their IPOs.

Crypto integration

However, not all impacts will be negative. The increasing demand for crypto-based investment opportunities will lead to greater integration with existing structures. We have already seen the beginnings of this with the approval of several Bitcoin ETFs, which provide a regulated, familiar way for traditional investors to gain exposure to crypto. These financial products will become normal, even commonplace, as mainstream adoption increases.

Regulatory and policy changes

However, regulatory adjustments will be necessary for mainstream adoption to be possible. We have seen some significant developments in this area. For example, Senate Majority Leader Chuck Schumer recently pledged to enact crypto regulation before the end of the year. Legislation that ensures investor protection, limits market manipulation, and encourages innovation will likely emerge around the world. Policymakers will need to work with the private sector to develop frameworks that both allow crypto to thrive and ensure it does not undermine overall financial stability.

Digital payment expansion

Part of this legislation would have to address the explosion of digital payment options. Recently, a bipartisan bill was introduced by Senators Tedd Budd (R-NC), Kyrsten Sinema (I-AZ), Cynthia Lummis (R-WY), and Kirsten Gillibrand (D-NY) to repeal the capital gains tax on small crypto payments. If successful, such legislation would set a precedent and encourage more countries to follow suit and integrate crypto into their everyday economies. Imagine paying for your morning coffee or splitting the dinner bill without thinking about the tax implications.

Technological and social patterns

As crypto adoption grows, so does blockchain innovation, with new use cases being created every day. From supply chain management to healthcare, distributed ledgers can help increase transparency, security, and traceability.

Digital identity and trust

Governments around the world are exploring digital identification, but few are incorporating blockchain technology into their initiatives. If crypto continues to grow, blockchain-based citizen authentication will be a natural byproduct. Digital IDs on the blockchain can significantly reduce fraud, streamline transactions, and provide secure, authenticated access. With the help of identity layers from companies like Concordium, your identity is universally recognized, securely stored, and irrefutable.

Social effects

To reach 40% or more, trust needs to be embedded in technology itself rather than in human institutions. For many, this shift requires a leap of faith. Peer-to-peer transactions could become the norm, reducing reliance on traditional banking. Younger, tech-savvy generations could lead the shift, driving innovation and new business models. But it could also exacerbate digital divides. Those without internet access or technological literacy could find themselves further excluded. Policy and education programs will need to be created to promote inclusive access to new financial systems.

Environmental policy

One of the most pressing issues surrounding the widespread use of cryptocurrencies is the environmental impact. Major tokens like Bitcoin (BTC) operate on a proof-of-work model that requires extensive computational resources and therefore a large amount of energy. The Environmental Working Group has called for change through its “Change the Code, Not the Climate” campaign, advocating for Bitcoin to shift away from PoW to less energy-intensive models like proof of stake.

But the environmental story is not all doom and gloom. Crypto and blockchain technology also offer promising ways to advance green energy initiatives. Peer-to-peer energy trading, where individuals can buy and sell their renewable energy directly to their neighbors, could reduce our reliance on traditional sources.

Final thoughts

There is still much to be done if we want widespread crypto adoption. None of it is possible without thoughtful, comprehensive policy that supports innovative technology.

I hope that recent developments in the US and ongoing public pressure in the EU and UK will force lawmakers to realise that the public wants and deserves strong and supportive crypto frameworks rather than endless restrictions.

Boris Bohrer-Bilowitzki

Boris Bohrer-Bilowitzki is the CEO of Concordium, an L1 blockchain and technology firm. He previously worked as chief commercial officer at Copper.co in London and as senior relationship manager at Newscape Capital Group. He attended the University of St. Gallen and holds an MBA from IMADEC University.