Bitcoin Adoption 101

Dec 14, 2024

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min read

With global crypto adoption set to exceed 8% in 2025, it's clear that Bitcoin is paving the way for the wider cryptocurrency market.

Currently, more than 460 million Bitcoin addresses have been created, but why is Bitcoin seeing increased adoption?

We break down Bitcoin's growing popularity as part of our "Prosper 101" educational series.

Adoption Amongst Real Users

First and foremost, Bitcoin continues to see increasing adoption amongst real users. Created by Satoshi Nakamoto as a peer-to-peer decentralized digital currency, Bitcoin is an pseudonymous, immutable, and permissionless asset that provides an alternative to traditional, government-backed fiat currencies.

Bitcoin is a medium-of-exchange that continues to see increasing use as a decentralized payment method, whilst simultaneously acting as a store of value amidst growing economic uncertainty.

Increasing Use Cases

Whilst the Bitcoin community has largely stayed true to Nakamoto's vision for the Bitcoin network, recent innovations have led to an increasing number of use cases that have helped Bitcoin to achieve mainstream adoption.

These innovations include:

Bitcoin Layer 2s – Protocols that process transactions off-chain to tackle Bitcoin's scalability limitations
Smart Contract Functionality – Built on Layer 2 protocols, Bitcoin smart contracts allow for greater programmability and efficiency
Wrapped Bitcoin – A tokenized representation of Bitcoin on other blockchain networks, providing users with access to additional DeFi ecosystems

Investment Potential

Bitcoin has also continued to demonstrate its significant potential as an investment, surpassing the $100,000 mark for the first time on December 5th, 2024.

In November 2024, Bitcoin's total market capitalization also surpassed that of Meta, Silver and Saudi Aramco, making it the seventh most valuable asset in the world.

Additionally, Bitcoin is a scarce asset with a limited total supply of 21 million coins. As Bitcoin halving events lowers the supply of new Bitcoins entering the market, it decreases the rate at which Bitcoin's circulating supply increases.

Institutional Adoption

Bitcoin's institutional adoption has also helped to draw mainstream attention to the asset, whilst also increasing liquidity.

Some of the biggest impacting factors include:

Bitcoin ETFs have arguably had one of the most significant impacts on Bitcoin's wider adoption. In fact, since their launch in January, spot Bitcoin ETF AUM is now more than $115 billion (as of December 12th, 2024).

Corporate Treasury Adoption

Corporations are increasingly holding Bitcoin in their treasuries. Bitcoin has been proven to act as a hedge against inflation and currency devaluation, making it an attractive proposition for large companies.

Some of the most notable Bitcoin holdings (as of December 12th, 2024) include:

MicroStrategy (NASDAQ: MSTR) – 423,650 BTC
Marathon Digital Holdings Inc (NASDAQ: MARA) – 40,435 BTC
Riot Platforms, Inc (NASDAQ: RIOT) – 10,019 BTC
Tesla, Inc (NASDAQ: TESLA) – 9,720 BTC

Companies buying (and holding) Bitcoin at scale drives demand for the asset and serves as an endorsement of Bitcoin's long-term viability.

Changing Regulatory Landscapes

As Bitcoin continues to increase in popularity, and cryptocurrencies in general become more widely understood, the regulatory landscape is becoming more clear for investors.

The recent US presidential election saw a "pro-crypto" Donald Trump returning to office. This, combined with Trump's decision to replace Securities and Exchange Commission (SEC) chair Gary Gensler with Paul Atkins, has made investors excited at the prospect of relaxing regulations.

Additional regulatory changes include:

The Markets in Crypto-Assets Regulation (MiCA) in the EU
The FCA's "Crypto Roadmap" in the UK
The introduction of increased Know Your Customer (KYC) checks on crypto exchanges

Bitcoin's Continued Adoption

According to BlackRock, the world’s largest asset manager, Bitcoin is a unique diversifier that can appeal to investors and their portfolios. In fact, BlackRock also recently published recommendations on portfolio allocations for Bitcoin.

Acting as a means of exchange, a store of value, and a decentralized alternative to traditional banking, it's clear that Bitcoin's adoption will only continue to grow.

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