5-Year-Old Bet on Bitcoin Adoption Lost Over Low Use in E-commerce

Omar Faridi
  • Bitcoin bull and venture capitalist predicted 10% of Americans would use bitcoin for daily purchases by 2019.
  • Horowitz appears to have lost the bet he made with journalist Felix Salmon five years ago (in 2014).

Ben Horowitz, a well-known bitcoin (BTC) bull and co-founder and general partner at Andreessen Horowitz, a giant venture capital firm with over $4 billion of assets under management (AUM), had predicted in 2014 that over 10% of Americans would have bought something with bitcoin every month by 2019, as he expected the cryptocurrency's use in e-commerce to grow.

Horowitz’s prediction came in the form of a bet he made with financial journalist Felix Salmon during a “Planet Money” podcast five years ago. At that time, bitcoin, the flagship cryptocurrency, was trading in the $360 to $760 price range.

During the 2014 Planet Money podcast, Horowitz said that bitcoin would revolutionize the traditional e-commerce and payments industry. However, Salmon, a financial news reporter who currently works at the Axios media outlet,  bet against Horowitz’s predictions as he had argued that BTC’s rising price would discourage people from using it for everyday purchases.

According to Salmon, bitcoin would not evolve and achieve mainstream adoption as he could not envision more than 10% of Americans using the pseudonymous cryptocurrency for daily transactions in 2019. Fast forward five years, the host of NPR’s podcast Planet Money had conducted a poll to assess how frequently people were using the world’s most dominant cryptocurrency.

900 Americans Respond To Survey

With the poll expected to determine who’d win the bet between Horowitz and Salmon, the survey’s results show that only 3% of US residents had bought something with bitcoin in the last month.

Approximately 900 Americans participated in NPR’s poll which asked them to respond to the following question: “Have you purchased anything using Bitcoin as your payment within the past month?” As mentioned, only 3% (which is well below the 10% expected by Horowitz) of US-based shoppers have been making purchases with the cryptocurrency.

Bitcoin Adoption Is Steadily Increasing

Although bitcoin adoption may not have reached the level Horowitz thought it would, there are more merchants taking BTC payments today than in 2014. As CryptoGlobe reported in early December 2018, there are around 1,500 restaurants in Denmark that accept bitcoin as payment method through the Hungry.dk online food portal.

Wikimedia, a free online informational resource supporter, has been accepting bitcoin payments for several years now. As the primary organization that supports Wikipedia, the Wikimedia foundation is now also accepting bitcoin cash (BCH) payments. Mainstream crypto adoption could take longer than initially expected, however many analysts remain confident that the market will eventually recover.

Institutional Derivatives Volumes Went Cold After Crypto Market Crash: CryptoCompare

  • Institutional derivatives trading plummeted following March's crypto market crash according to latest CryptoComapre report. 
  • Mar. 13 generated the highest daily volumes in cryptocurrency history, generating $75.9bn in trades. 

Volume trading on institutional derivatives plummeted following the crypto market crash in March. 

According to the  CryptoCompare March 2020 Exchange Review, institutional derivatives volumes tanked following the market crash on Mar. 12, which saw the price of bitcoin drop as low as $3,800. Trading volume across institutional exchanges, including CME, declined more than 43% in March compared to the month before. 

According to the report, 

Institutional appetite for derivatives products appeared to decline rapidly following the BTC crash, with CME losing 44% of volume compared to February. Trading volumes totalled $7.36bn in March compared to $13.1bn in February.

cryptocompare march 2020 guideVolume trading across crypto exchanges in March 2020 | Source: CryptoCompare

The report found that CME options trading, which launched in January of this year, have not seen significant improvements in volume and are far from generating the activity seen on rival crypto exchange Deribit. 

Despite the market crash, Mar 13. brought about the highest daily volumes in cryptocurrency history, generating $75.9bn in trades. Lower Tier exchanges accounted for the majority of the volume at $54.3bn, while Top Tier volumes also set a record at $21.6bn in daily trades. 

According to the report, spot volumes surged in Q1 2020, with Top Tier exchanges increasing month-on-month since December 2019. Even with the economic uncertainty of the coronavirus, spot volumes for Top Tier exchanges increased 35% on average vs February.

While crypto experienced its single largest day of volume trading, March’s overall volume failed to reach the same levels of Dec. 2017’s crypto bull run.

The report reads, 

Despite the March price crash, volume levels for these exchanges still haven’t reached those seen in the Dec-2017 bull run. Overall, volumes across all Top Tier exchanges increased 8.0% to $288Bn in March.

Binance was the largest Top Tier exchange by volume in March, trading $63.6bn, an increase of 19.2% over the month before. OKEx generated the second-largest volume of $47.7 bn, down 8.2% from February. Coinbase experienced the largest percent increase in volume trading during March, generating $13.3bn, up 41.9%.

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