The financial industry is shifting towards the digital space, with the global digital payments market generating almost $100 billion in revenue last year, with projections to reach $303 billion by 2030. The Bitcoin market is gaining greater attention, as the recent U.S. banking crisis and the negative outlook of the global economy serve to drive more individuals and businesses toward this sector.
The main reason behind this shift is the increasing institutional adoption of Bitcoin. Institutional investors have entered the market en masse, fueling a major bull run and accumulating more than 7.8% of the total BTC supply as of May 2023. Consequently, bitcoin has become a legitimate asset class that is taken more seriously by more people. Moreover, a 2022 Deloitte survey revealed that 75% of polled retailers are planning to accept cryptocurrency payments within the next two years.
However, Bitcoin mining operations are often associated with high energy consumption, presenting a major barrier to mainstream adoption. But Bitcoin’s inherent energy consumption can actually offer significant benefits by stabilizing electricity grids and reducing the cost of power for consumers by balancing supply and demand.
In recent years, there has been a growing trend toward accepting bitcoin as a legal payment method. Several countries have legalized using BTC for various purposes, such as buying goods and services or paying taxes. In September 2021, El Salvador became the first country to make bitcoin a legal tender currency. Despite a somewhat troubled start, the nation’s experiment has come with many positive results, especially if we consider the Salvadoran GDP growth of over 10% in 2021 and the 30% increase in tourism since BTC’s adoption.
While the legalization of Bitcoin as a payment method has many advantages, independent cryptocurrencies have always been seen as a threat to fiat. Crypto adoption increasing worldwide is surely the reason why many governments are committed to developing their own central bank digital currencies (CBDCs). These are essentially national currencies with state control over their issuance and payment networks.
With a shift in consumer and business attitudes, growing use as a store of value and a medium of exchange, as well as positive developments in the mining industry and among national governments, Bitcoin is gradually progressing toward mainstream adoption.