Is rate of crypto-innovation the biggest challenge in itself?

The crypto market surpassed the combined market cap of $3 trillion for the first time on 8 November, 2021. It is considered the fastest market to reach such high levels of valuations in such a short time despite the fact that it was quite a bumpy ride.

Blockdata co-founder Jonathan Knegtel, in a recent interview, also commented that “blockchain, Bitcoin and cryptocurrencies are no longer some young, innovative technology”.

Discussing the evolution of DeFi in 2020, Knegtel accepted that today’s market maturity was pumped by the 2017 ICO boom. He noted,

“A lot of companies are making announcements. But if it wasn’t for the ICO boom in 2017, moving into 2018, you could argue we wouldn’t have the progression, the maturity that we see today.”

However, he further argued that “the amount of innovation in this space is almost impossible to keep up with, which might be our biggest challenge”.

As despite challenges like regulatory uncertainties, reports point out skyrocketing crypto adoption. As of 2021, the global crypto ownership rate was estimated at 3.9%, with close to 300 million crypto users.

But, where are we in terms of mainstream adoption? Knegtel explained,

“‘Perpetual’ is a word that I’ve started to use more and more when describing the ecosystem because more users are coming in, and then the value goes up, and then the value kind of gets circulated inside and people start funding each other, and then that’s the stage we’re at now.”

Astronomical growth attracting financial institutions

Having said that, according to a Civics Science Survey shared by “Shark Tank” investor and Dallas Mavericks owner Mark Cuban,

“A full 28% of the general population expects their crypto investments to act as a long-term growth investment, with almost another quarter (23%) treating crypto as a short-term investment.”

With that kind of customer demand, it is noteworthy that traditional financial institutions have been jumping into the asset class globally. Blockdata co-founder also noted,

“So now what we see is we see a new generation of services that, most importantly, are providing almost the same level or same feature parity as the challenger banks…”

As per CoinShares’ weekly fund flow data, digital asset investment products saw total inflows of a record US$8.7 billion year-to-date. This figure represents a 30% growth against 2020. The investment is also evident from the latest crypto-backed partnerships. Just last week, Australia’s largest bank CBA became the first to announce retail crypto-services to its clients. Soon after, ANZ might be following suit by incorporating crypto tokens.

But, is it competition for the banks? In the context of that, Bank of America COO Tom Montag recently noted,

“I don’t view it as competition at all. I view it as just another asset class … and people like it for all sorts of different reasons.”