Loud and Clear: The Crypto Industry’s Pursuit For Validation

Loud and Clear: The Crypto Industry’s Pursuit For Validation

As a protocol founder, I often think about how much the crypto industry has grown in the past year. It serves as a helpful metric for me to understand how the market is performing overall. And, I also get to brag in front of my friends and family about the incredible growth of the crypto industry. From $339B to over $2.4T (market cap) in almost a year is no joke. Despite that, some like to put the industry on the sideline. My only question to them is, how?

Crypto is seeing worldwide adoption at an exponential rate. Think about the billions of dollars that have exchanged hands either through partnerships and/or investor offerings and/or VC. Regardless, for some it is a closed-door industry that is, as yet, waiting for its heyday. But today, I’ve decided to bust that argument completely.

In this week’s Magnify, I want to explore how crypto as an asset class has helped diversify investors’ portfolios; solved the problems of millions of people who don’t have access to banking; and completely revolutionized how we look at digital assets.

Let’s dive in.

For the commercial banks

Most of the smartest people on Wall Street are too sceptical of digital assets. Yet, we have seen even veteran investment banks getting into the space.

JP Morgan is offering its investors access to six crypto funds. Goldman Sachs is offering Bitcoin and other digital assets services to its wealth management clients. Other banks including Wells Fargo have also started offering investment opportunities.

In most of these cases, it has been the investors who have continuously called for access to crypto funds, prompting these banks to introduce various products/access to funds regardless of their own stance on the industry.

For the Fintech

Even fintech corporations have now started offering crypto transactions to their users.

Amongst the traditional financial services companies, Square was the first to offer crypto transactions to its users way back in 2018. Despite the odds, the company’s persistence to stay within the space has proven beneficial. This increasing revenue stream, then, prompted other financial services providers like Visa, MasterCard, and PayPal to introduce their own offerings of crypto and Bitcoin. For a behemoth like Visa, which has a market cap of $500B, partnering with FTX, Coinbase, and Circle is just another way of opening a new revenue stream.

Visa has shown interest in the NFT space as well and has even bought a CryptoPunk. It also recently announced a “universal payments channel” that would facilitate transactions between various stablecoins and potentially even CBDCs. Their aim is to provide a digital currency that enables users to pay in a foreign country using their funds in a bank account in their home country.

Companies like AT&T, Starbucks, Dallas Mavericks, Microsoft, Etsy, Wholefoods, Home Depot, Twitch, and AMC are now accepting crypto payments.

For the unbanked

Unlike traditional banking services, crypto is globally inclusive. The high barrier of entry for traditional banking systems (in some countries) often makes it difficult for users to access their services.

People in developing economies are rapidly using cryptocurrencies both as a way of storing value and as a medium of transactions. This is especially true for Latin American and African nations.

Thanks to rising inflation and clunky banking systems, the mass adoption of cryptocurrencies in these nations is inevitable.

Another factor to consider is the cost of cross-border transactions, which can go up to to 9% (of the amount being transferred) and more. On the other hand, p2p Bitcoin transactions on an exchange like LocalBitcoins can happen at a mere 2–5%. The latter, therefore, is a preferred option for millions of people who want to do cross-border transactions.

El Salvador has been at the forefront of this revolution. Brazil is following suit by introducing a bill that will allow users to buy anything from a car to a hamburger with Bitcoin.

For the artists

NFTs have helped create another entry point for the non-tech and non-finance audience by empowering millions of creators to monetize their work. Within a few months of the initial rage and frenzy, several legends like Tom Brady, Lionel Messi, and Steph Curry have jumped on the bandwagon. Tom Brady, in fact, has created a dedicated NFT marketplace for sports stars in the US and already features collections from Tiger Woods, Wayne Gretzky and Usain Bolt among others.

Influential NFT projects like CryptoPunks and Bored Ape Yacht Club have helped foster new communities around digital assets. They have not just piqued the interest of the everyday investor, but also of heavyweight financial institutions. Even TikTok is releasing one-of-one NFTs with Internet sensations like Lil Nas X and Grimes among others.

For everyone who is repulsed by the complexity of the larger crypto industry, NFTs have proven to be a much softer entry point. And if that isn’t enough, then various brand ambassador programs are being launched to spread awareness.

For culture

Exchanges like FTX have been increasing their efforts to magnify their brand image. Recently, they announced a partnership with the Mercedes F1 team, which will see the FTX logo being featured on both the cars and drivers. They have also signed a 10-year $17.5M naming rights deal to the University of California’s Cal Memorial Stadium. The exchange has also signed a 19-year partnership (worth $135M) to rename the Miami Heat’s home stadium to the FTX Arena.

CoinDCX, another popular crypto exchange in India has signed the legendary actor Amitabh Bachchan as their brand ambassador. Just a few weeks ago, he was doing public service announcements for the Reserve Bank of India. We can only imagine the kind of impact this presence will have on the overall crypto market base in India (which is already worth $2T).

Amitabh Bachchan also featured in The Great Gatsby

Crypto.com is also ramping up its efforts in expanding its presence in sports. It recently announced a 10-year partnership with UFC, offering to pay $175M in return for being the global fight kit partner. Its branding will appear on the uniform of every UFC fighter.

Additionally, the company is sponsoring Formula 1, with a five-year deal of over $100M. As part of the agreement, Crypto.com, will have a brand presence around all F1 events, which comprise the new qualifying format that is being used to determine the starting position of cars. It also aims to introduce a new award at F1’s Belgian Grand Prix in August and become F1s NFT partner.

Do we need more validation?

The impacts I discussed above form only the tip of the iceberg. The industry has done enough to prove that it has the ability to solve major problems. Thus the answer to the question is a resounding no.

Cryptocurrency isn’t a technology that is forcing its way in. And despite its potential, most governments are putting the industry through constant regulatory scrutiny. What more validation do they need?

  • Prove that it’s a solution, not a problem: done.
  • Show the impact that it has made: done.
  • Attract both users and institutions to invest: done.
  • Get social proof by acquiring stadiums, partnering with the biggest stars, and even featuring on Forbes cover: done.
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Now, the onus is on everyone else to simply grasp the enormous potential of the technology and embrace it. And if this can happen with regulations on our side, it’s a win-win for all of us.

What do you think?