Wells Fargo Investment Institute, a leading banking and investment management firm globally, has released a report highlighting that crypto is still in its very early start.
According to the company, crypto adoption is following a similar adoption path to the internet seen in the early-to-mid 1990s.
The report says that cryptocurrencies appear to be near a hyper-adoption phase making them a viable investment today even though they remain in the early stages of their investment evolution.
Despite the growth in the crypto space, the report says:
“Cryptocurrencies are still a relatively young investment space. The vast majority are, in fact, less than 5 years old. Even the oldest cryptocurrencies have much maturing to do.
For example, bitcoin is the oldest and arguably one of the least volatile cryptocurrencies, but it is still roughly 4 times more volatile than gold and a basket of global equities.”
– Wells Fargo
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Wells Fargo says it is emphasizing on investor education when it comes to cryptocurrencies since they are still in the ‘early, but not too early’ investment stage.
Here is a comparison of crypto adoption vs early ’90s internet adoption according to the report:
- It often takes many years, sometimes decades, between the actual inventions and surging adoption rates – Less than 1% of the world was using the internet in mid-90s after 12 years. Similarly, roughly 3% of the world uses cryptocurrencies since its inception 13 years go
- User experience in the early days are often clunky and frustrating and consumers figuring out how the technology can benefit them – In the early 90s before the web browser, using the internet was limiting and frustrating. Simiarly, crypto is still daunting to many today and use cases remain majorly unclear
- Adoption rates rise quickly and hit an inflection point – After a slow start in the early ’90s, internet usage surged from 77 million in 1996 to over 412 million in 2000. Simiarly, crypto usage has more than doubled in just one year
- Regulatory Progress – Legal and oversight frameworks are drawn to solidify investable assets and a lack thereof is an important roadblock. Currently regulatory progress in crypto will support acceleration of crypto adoption
- Early-stage investing is often fraught with violent boom and bust cycles – As many dot-com companies and investors can attest from 20 years go, there are now over 17, 000 cryptos with odds being high that many will see future shakeout events
- Picking long-term technology winners is no walk in the park – The most visited websites in the mid-90s did not stay relevant much beyond the year 2000. Interestingly, the most successful company today from that error was a small hardware company on the brink of bankruptcy in 1997. Similarly, it is difficult to figure out who will emerge a big player today in the crypto space.
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Read / Download the Wells Fargo report here
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