Over the last decade, the term “cryptocurrency” has been alive and entirely impossible to ignore in the financial world. Digital tokens such as Bitcoin have experienced exponential adoption onboarding new users across the globe. Due to this, companies and platforms from various sectors have opened their doors to crypto as a payment option, going further to incorporate digital coins and related assets such as non-fungible tokens into their product and service offerings.
The unmistakable impact of the crypto phenomenon has even pulled whole countries into the mix. While some jurisdictions have whole-heartedly accepted crypto (El Salvador for example turned Bitcoin into a legal tender), others are actively working to curb its growth within their borders. Yet another route several nations are either on or considering taking is developing a cryptocurrency of their own, that is a Central bank Digital Currency (CBDC).
All of this points to how firmly cryptocurrencies have planted themselves within the global economy. However, in exact numbers, what is the value of the crypto industry? Let’s explore this further;
A cryptocurrency is a virtual currency that uses blockchain technology to function as an alternative medium of exchange. Cryptocurrencies are secured by cryptography which makes it near-impossible to conduct fake ir duplicate transactions. These assets are decentralized, that is they operate without the involvement of a 3rd party, or centralized authority such as a bank or government.
Bitcoin, the first and biggest cryptocurrency to date was created to address weaknesses in traditional finance system. One of anonymous creator Satoshi Nakamoto’s main goals was to reduce the control of the top dogs in the existing system. With Bitcoin (and other cryptocurrencies later on) came decentralization, a model where regular users got to be completely in charge of their own money and not have to place their trust in banks and fiscal organizations. Additionally, as stated earlier, most cryptocurrencies are blockchain-based and this means transaction data is stored on a public ledger that cannot be altered or deleted.
In 2022, the World Economic Forum revealed that up to 22% of the total adult population remained unbanked. This percentage amounted to about 1.7 billion people at the time of which 1.1 billion, interestingly had access to a mobile phone. Cryptocurrency is a very viable option for the unbanked population particularly those who do not have access to traditional banking services. One of the most significant selling points of this digital currency is its accessibility, anyone with a smartphone and internet connection can hop aboard the crypto market giving unbanked persons a great medium to store, send, and receive funds.
Under the traditional framework, remittances and cross-border payments may come with frustrating challenges such as high fees and slow processing times. Currency conversion charges and transfer fees must be taken into consideration. Also, it could take several days or even longer before the funds reach their final destination. However, crypto transactions are often completed within minutes and while fees may vary from platform to platform, they are generally much lower than banks and similar financial institutions.
As the crypto and blockchain industry continues to grow, so does the demand for skilled individuals across its various sectors. Cryptocurrencies as an asset class also present potential investors with the opportunity to buy, hold, and trade a wide range of assets to earn profit.
The go-to metric to calculate this is the global crypto market cap.
Market capitalization refers to the total dollar market value or worth of an asset class. In the case of the crypto market, the market cap is the total worth of all the circulating tokens, coins, or units of a particular cryptocurrency. To calculate the market cap of a cryptocurrency, you multiply the total number of tokens by their current market price. The global market cap on the other hand tries to take all cryptocurrencies into account. It is the sum of the market caps of all digital tokens currently on the market.
At the moment, Coin Gecko reports a global market cap of $1.07 Trillion. Please keep in mind that this value is subject to change due to the crypto market’s volatile nature.
As the leading cryptocurrency, Bitcoin's market cap makes up the majority of the overall market capitalization. BTC’s total market capitalization is estimated to be $502 billion presently meaning the digital coin takes up a 46.8% share of the overall market cap. The king crypto currently has a circulating supply of roughly 19 million tokens with each one worth $25,805 at writing.
One reason cryptocurrencies like BTC appeal so greatly to investors is their purported resistance to inflation, Inflation refers to the decrease in the purchasing power of a currency such as the dollar or the Euro over time. To put it simply, as time passes a single dollar is able to buy fewer goods and services. Part of the reason for this is that more money than consumers actually need is in circulation.
Some believe Bitcoin can act as a hedge against inflation because of its design; the digital currency has a limited and known supply. Yes, new tokens will be entering the market meaning BTC does experience a form of inflation. However, there will only ever be 21 million bitcoin, and as time passes fewer tokens will be pumped into the market.
Keep in mind though that not all cryptocurrencies are the same. Stablecoins, tied to currencies like the dollar, can lose value if their pegged currency inflates. Also, the crypto market is prone to dramatic dips and swings in price so a diversified portfolio is definitely worth some thought.
Another asset that has been described as a hedge against inflation is gold, so let’s weigh some of its key features against those of Bitcoin;
Table comparing Bitcoin and gold.
This depends on your investment goals. Gold is a great way to store value over time while Bitcoin is more volatile but more likely to offer high returns.
Satoshi Nakamoto, Bitcoin’s anonymous inventor is believed to own the most BTC with a stash of 1,000,000 Bitcoins.
Besides Bitcoin, popular cryptocurrencies include Ethereum (ETH), Binance Coin (BNB), Cardano (ADA), and Solana (SOL), among others.