One of the questions I get most often from institutional investors is, How is crypto actually being used? Similar to other digital revolutions, like personal computers in the 1980s or the internet in the 1990s, it can be hard to see the implications of new technologies in advance. 

This is true for crypto today. While there’s much excitement around Bitcoin as a store of value, Ethereum as a major platform for Web3, non-fungible tokens (NFTs), and decentralized finance (DeFi), it remains difficult to understand exactly how these technologies are being adopted.   

This lack of a real-world understanding of crypto applications, however, is changing rapidly. Crypto adoption is at an unprecedented inflection point. A few examples to support this claim: 

 

• Bitcoin’s use case as a borderless, decentralized asset without counterparty risk is playing out before our eyes as the banking and monetary system is being questioned and global payment systems are being weaponized like never before (e.g., SWIFT ban on Russian banks and the BRIC de-dollarization coalition).

 

• Ethereum’s most recent upgrade, the end result of eight years of development and research, has been successfully activated and is moving the network toward becoming crypto’s “risk-free rate” and allowing more investors to access ETH in a liquid way. 

 

• Many other crypto assets, including those that are powering the DeFi and Web3 revolution, are giving investors the opportunity to benefit from a broadening decentralized infrastructure that is becoming increasingly scalable.  

 

• Giant corporations like BlackRock, Google, and Fidelity are implementing incredibly large-scale crypto projects and many of the world’s largest companies are currently incorporating NFTs into their businesses—including Nike, Starbucks, and Gucci.    

 

Despite the positive news of these developments, it remains hard to comprehend how a new technology like crypto will be adopted without first understanding historically how powerful new innovations have grown to dominate our everyday lives. 

Looking at what drove internet adoption in the early 2000s is a good place to start. 

 

Broadband and the birth of Web 2.0

 

Twenty years ago, the majority of the world accessed the internet through a dial-up connection. This technology used phonelines—one user at a time—to connect to the world wide web. 

 

 

Compared to the high-speed and high-capacity internet access we are used to today, internet access in the early 2000s was comically slow, unreliable, and extremely limited in bandwidth. 

This began to change as fiber-optics and other new technologies emerged that allowed for a much faster and efficient transfer of data, allowing for “always-on” broadband connections.  

What this meant was not only faster speeds, but also better content, reliability, and higher quality performance. Broadband accelerated the shift from the static nature of Web 1.0 to a dynamic Web 2.0 that allowed for Facebook and Twitter, live streaming on Netflix, and an abundance of high-quality content, services, and applications. Maybe most importantly, broadband allowed more people in more places to access the internet.

This transition, of course, did not happen overnight. In addition to the substantial technology and infrastructure investments needed to make broadband a reality, there were industry battles pitting incumbents against new market entrants (e.g., AT&T vs. AOL) that made their way into political debates about the best way to give people increased access to the internet. Eventually, these conflicts faded as innovation helped meet consumer demand for better internet access.   

 

Crypto and the birth of Web3 

 

In the same way that broadband allowed Web 2.0 applications to scale and reach a huge mass of consumers, recent blockchain network developments and smart contract platform advancements are transforming crypto’s scalability and adoption, making Web3—the next evolution of the internet defined by decentralization and permissionless participation—possible. 

This relationship between internet adoption and crypto adoption is also evident in the growth of users. Since 2015, the increase in crypto users has tracked internet users in the mid-1990s. The internet hit one billion users in 2005 in the wake of an explosion of broadband access. Crypto is projected to hit this milestone in 2025. 

 

 

In other words, crypto is having its own broadband moment.  

What is different this time compared to other developmentally important moments in crypto’s history is that now it is not only Bitcoin leading adoption and interest from institutional investors. Hidden in the noise of the debacle of the fragile, centralized industry players that failed in 2022, was a crypto industry making huge leaps in development that we are seeing play out now.

The Ethereum ecosystem is thriving after its full transition to Proof-of-Stake (PoS) as other smart contract platforms, like Polkadot and Avalanche, are helping to scale how this technology is used. Strategic partnerships between traditional businesses and crypto platforms are slowly pushing NFTs to a broader and more mainstream audience. DeFi solutions are becoming more intertwined with traditional finance, as we have seen with JP Morgan, SWIFT, and ATMs in Brazil, while exchanges like Uniswap are competing for trading volumes with traditional centralized exchanges.  

And, while it remains disappointing that the US has been absent in creating a regulatory framework for this industry, many other countries and regions are filling the void. Europe’s finalization of the Markets in Crypto Assets (MiCA) regulation this month is a massive step in the direction of regulatory clarity. As challenging as 2022 was for the crypto industry, the industry’s resilience, institutional interest, and regulatory progress from last year have together supported an increasingly appealing investment case for crypto. 

 

Some final thoughts…

 

The two key factors that broadband delivered 20 years ago to make the internet a mainstream utility—better infrastructure and a generational shift—apply to crypto as well. This is happening right now as infrastructure developments are making crypto more scalable and accessible, and a younger, digital-native generation is pushing the technology forward. What this means is that in the not too distant future, crypto will become as ubiquitous in our lives as the internet has been over the last two decades. 

 

 

The current inflection point—defined by a confluence of infrastructure developments, institutional adoption, and prices suppressed by a macro backdrop unfavorable for risk assets—is providing an excellent opportunity for gaining broad exposure to this asset class. Perfectly timing investments in crypto is not possible, but for investors that are focused on the long-term fundamentals, the current environment is an incredibly attractive opportunity. 

 

_{[1] The term “broadband” is used mainly to describe the post-dial-up era of internet connectivity.}

 

 

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