The global cryptocurrency sector will soon account for nearly $35 billion worth of transactions worldwide
When Bitcoin was born in 2009, the word ‘cryptocurrency’ was hardly typed into a Google Search browser.
Fast-forward to 2022, and the vice chair of the Federal Reserve Lael Brainard, has described “serious vulnerabilities” within the crypto financial system.
“Despite significant investor losses, the crypto financial system does not yet appear to be so large or so interconnected with the traditional financial system as to pose a systemic risk,” Ms Brainard said.
According to recent data, 16 per cent of Americans used or owned cryptocurrencies this year.
This is three times more than 2019 figures.
What’s all the fuss about?
The hype surround cryptocurrencies is spreading around the world, according to new analysis by the Statista Global Consumer Survey.
Digital currencies like Bitcoin, Ethereum, and Binance have drawn the interest of more and more people during this time.
In fact, Brazil, Germany and the U.S. reported a jump in crypto users between 2018–19 and 2021–22.
In some cases, like in India, the number of crypto users more than tripled.
Indian crypto users rose from 8 to 27 per cent in the same reporting period.
Ms Brainard said the ‘get rich, quick’ promise of cryptocurrencies is not as attractive as it seems.
“Contrary to claims that crypto-assets are a hedge to inflation or an uncorrelated asset class, crypto-assets have plummeted in value and have proven to be highly correlated with riskier equities and with risk appetite more generally,” she said.
U.S. cryptocurrency users have risen from 5 per cent in 2019, to 15 per cent by 2022.
Meanwhile, Spain and South Africa have seen modest gains, with slight increases to 26 and 23 per cent respectively.
Is this growth sustainable?
While India has the highest number of crypto users, the U.S. is responsible for 53 per cent of all transaction value.
Over $18 billion will be generated in the U.S. market, while Japan, Britain and South Korea all contribute more than $1 billion annually.
As the sector continues to grow, the Federal Reserve is pushing for regulatory action.
“It is important that the foundations for sound regulation of the crypto financial system be established now before the crypto ecosystem becomes so large or interconnected that it might pose risks to the stability of the broader financial system.”
Lael Brainard, FEDERAL RESERVE
Statista believes the adoption of cryptocurrencies will continue growing on a global scale.
In fact, estimates show 257.2 million crypto users worldwide, or 3.2 per cent of the world’s population.
The base of crypto users will expand at double-digit rates through to 2023, despite user growth slowing down.
Statista expects close to 294 million crypto users next year. This is an annual increase 14 per cent.
