12 Graphs That Show Just How Early The Cryptocurrency Market Is

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Medium | Chris McCann at Graylock Partners | May 6, 2018

From the time the first website was published in 1991 until today, the internet has profoundly reshaped humanity.

Comparisons between cryptocurrencies and the growth of the internet are invariably drawn (including cryptocurrencies’ netscape moment); however, I wanted to test this comparison and see exactly how far along we are.

In this post, I’ll also be exploring the growth of the cryptocurrency market & the early growth of the internet, to see what takeaways we can uncover.

What makes this comparison tough

It’s impossible to know exactly how many people use cryptocurrency and how often because:

  • For people who self custodial their cryptocurrencies — people can have multiple wallets for different cryptocurrencies.
  • For people who store their cryptocurrencies on exchanges — 1 wallet address does not equate to 1 user on the exchange. It’s also typical for exchanges to create a wallet address for each transaction.

Thus, the only way to get an understanding of the number of users for cryptocurrencies is through approximations.

Measuring cryptocurrency user growth

I tried to approximate cryptocurrency user growth in a few ways:

  • Bitcoin & Ethereum wallet growth
  • Bitcoin & Ethereum active addresses growth (proxy for DAU)
  • User growth of crypto-fiat and crypto-crypto exchanges
  • Total cryptocurrency trading volume over time

See: 

Takeaways:

  • Even though we’ve seen a huge increase for number of users of cryptocurrencies, tokens, and DApps — we are still in year 1994 if we compare the trajectory to the growth of the internet.
  • However, depending on your long-term view of the core-use cases of blockchains & cryptocurrencies, the analogy is either an apt analogy or a pointless endeavor:
  • If you view the core use-cases of cryptocurrencies as a new asset class then I wouldn’t necessarily expect cryptocurrencies to follow the same trajectory as the internet — both in terms of user growth & growth of assets (equivalent to websites on the internet).
  • If you view the core use-cases of cryptocurrencies as an application platform for decentralized applications (DApps) — or better known as the decentralized internet — then the growth of users & DApps would be comparable to the growth of internet users & website growth.

My biggest criticism towards the DApp future is we haven’t seen DApp usage keep pace with the number of DApps being created. The current core use cases of cryptocurrencies are speculation, store of value, assets, payments, etc.

Looking at the data we can see the use case of cryptocurrencies as an asset class has considerably more proof points and measurable user adoption. However, the future of decentralized applications, while interesting to track, is still too early to measure.

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