Can Crypto Ever Really Record $200 Trillion Market Cap? Is İt Possible? We Take A Look…
Earlier this month, we witnessed a conversation between Ethereum co-founder Vitalik Buterin and Binance CEO Changpeng Zhao about the future of the cryptocurrency industry.
Back in September 8, Buterin said it’s unrealistic to record 1000x gains in the cryptocurrency market anymore as he said:
“The blockchain space is getting to the point where there’s a ceiling in sight. If you talk to the average educated person at this point, they probably have heard of blockchain at least once. There isn’t an opportunity for yet another 1,000-times growth in anything in the space anymore.”
After Buterin’s considerably normal words, the overreaction in the social media is quite something. Buterin then needed to explain what he wanted to say first as he quoted with saying:
“To be clear, I never said that there is ‘no room for growth’ in the crypto ecosystem. I said there is no room for 1000x price increases. A 1000x price increase from today means $200 trillion in crypto, or an entire 70 percent of today’s global wealth being in crypto. What I actually said is that, because large portions of the population have already heard of crypto, further growth of crypto in any sense must come from depth (i.e., actual usage) and not bringing in more attention.”
To be fair, Buterin’s comments are quite realistic. If the market cap will become $200 trillion, that means the majority of world wealth will float into cryptocurrencies, which is highly unlikely at this stage. Buterin also right about his statements considering adoption and the creation of decentralized applications.
CZ: 1000x ‘is’ Possible
In contrast to Buterin, Binance CEO Changpeng Zhao said it’s possible that cryptocurrency market will hit $200 trillion as he offers an optimistic prediction on the future. Zhao said it is not accurate to measure the potential of the crypto market based on the traditional finance sector as he added:
“I still disagree with this. I will say ‘crypto will absolutely grow 1000x and more!’ Just reaching USD market cap will give it close to 1000x, (that’s just one currency with severely restricted use case), and the derivatives market is so much bigger.
“You also can’t use traditional market size to measure potential for new technologies or industries. If you used (and people have) taxi market size to estimate Uber’s potential, you would be off by quite a bit.”
Zhao might be right because of the size of the future market also counted on Blockchain. Lots of companies starting to look Blockchain technology as a serious alternative and it could lead to a massive adoption certainly, but it’s quite a long shot right now.
Investor: The Industry Has A Lot Of Potential
Meanwhile, Garry Tan, the venture capitalist said the industry has a lot of potential. Tan was the earliest investors of companies like Coinbase and Istacart, has funded 100+ startups that currently worth $20B. Tan said:
“My general sense is that it is possible but unlikely to be 1000x. Even if it did get there, you would be assuming securitization using security tokens, which isn’t exactly what speculators have in mind when they are hoping for more 1000x situations. They are generally thinking that their worthless altcoins will somehow be worth 1000x and security tokens will merely represent ownership in real assets. It’s a strange nuance but one worth mentioning.”
Also, finally, cryptocurrency enthusiast Mike Novogratz stated it’s not happening overnight for cryptocurrencies. Novogratz said:
“It won’t go there [$20 trillion] right away. What is going to happen is, one of these intrepid pension funds — somebody who is a market leader — is going to say, ‘You know what? we’ve got custody, Goldman Sachs is involved, [and] Bloomberg has an index I can track my performance against,’ and they’re going to buy. And all of the sudden, the second guy buys. The same FOMO that you saw in retail [will be demonstrated by institutional investors].”
We can see that a lot of big players have different opinions of the state of the cryptocurrency market. But it’s safe to say we will laugh these market cap from 5 years later. We need to accept that this industry is still fairly young and needs maturing. Once the custodial solutions and regulatory frameworks are on the way, we can expect these numbers to grow further.