Brian Armstrong Says Crypto To Fuel Global GDP—But How Exactly?
- Cryptocurrencies represent a small fraction of global GDP, primarily due to their direct market value.
- Crypto mining significantly contributes to the economies of some countries, creating jobs and driving infrastructure investment.
- The potential for future growth of digital assets is significant as blockchain technology becomes more integrated into various sectors.
In a recent Forbes interview , Coinbase CEO Brian Armstrong shared his vision for the future of crypto, saying, “Crypto is going to power more and more of global GDP.”
He emphasized that cryptocurrencies will create sound money and financial infrastructure, transforming economies worldwide.
While cryptocurrencies’ decentralized nature makes their exact contribution to global GDP hard to measure, their growing influence is undeniable.
Today, sectors like crypto mining and blockchain-based businesses, albeit small, are already important parts of global economies, boosting infrastructure investments and contributing to tax revenue.
But the big question remains: How exactly will digital assets fuel an even larger portion of the global economy?
Crypto Weight on Global GDP
Measuring the exact size of cryptocurrencies’ contribution to global GDP is challenging, given their decentralized nature and wide range of activities, including trading, mining, decentralized finance (DeFi) , and non-fungible tokens (NFTs) .
However, we can gauge their influence by examining the market size and the surrounding economic activity.
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At its peak in 2021, the total market capitalization of cryptocurrencies reached between $1 trillion and $3 trillion.
By 2023, it had settled at lower levels, with global GDP hovering around $105 trillion. This suggests that, in terms of direct market value, crypto remains a small fraction of the overall economy.
However, its direct contribution to global economies primarily stems from sectors like crypto mining , which plays a significant role in countries with major mining operations, such as the U.S., Kazakhstan, and Russia .
Mining creates jobs, drives infrastructure investment, and consumes vast amounts of energy.
Additionally, blockchain and crypto-related businesses also contribute to global GDPs by generating revenue, creating jobs, and paying taxes. According to Statista , global revenue from crypto services is estimated to exceed $20-30 billion annually.
Growing Slowly
Beyond its direct impact on global GDP, the crypto industry drives financial inclusion , especially in regions with limited access to traditional banking.
Cryptocurrencies offer alternative ways to store and transfer value, spurring economic activity in underbanked areas.
For countries heavily reliant on remittances, such as El Salvador and the Philippines, crypto is transforming cross-border payments by slashing transaction fees and boosting economic efficiency.
While cryptocurrencies currently a ccount for less than 0.5% of global GDP —around $500 billion—their potential for growth is substantial.
As blockchain adoption expands into sectors like gaming , DeFi, and supply chain management, crypto’s role in the global economy is poised to rise significantly.
What To Expect?
The worldwide cryptocurrency market is projected to generate $56.7 billion in 2024.
However, it faces challenges, with an anticipated compound annual growth rate (CAGR) of -20.01% from 2024 to 2025, leading to a total revenue estimate of $45.3 billion by 2025.
In 2024, the average revenue per user in the cryptocurrency market is expected to be $66.10, with the U.S. anticipated to lead globally, generating approximately $9.79 billion in revenue.
As for user engagement, the number of crypto users is projected to reach 861 million by 2025, with a user penetration rate estimated at 11.05% in 2024.
Despite regulatory challenges, the U.S. remains a leader in cryptocurrency innovation and adoption, with major financial institutions and tech companies driving the market.
Unlocking Resources for Expansion
Elaborating on the matter, Rob Viglione, CEO of Horizen Labs, told CCN:
“When it comes to economic growth, there are few more powerful levers than efficiency and productivity, two areas where crypto and blockchain could make a difference by removing intermediaries. Smart contracts, for example, automate agreements, streamlining processes in areas like supply chains. For example, FedEx, DHL, and others are already doing this .”
According to Viglione, smart contracts reduce delays and operational costs . It also makes cross-border payments faster and cheaper, which allows businesses to scale globally.
Additionally, blockchain’s built-in transparency minimizes fraud and ensures data integrity. It’s a significant benefit for finance, healthcare, and logistics sectors.
Crypto and verifiable computation also add trust to the digital world, which is essential for economic growth. Zero-knowledge proofs (ZKPs) let users verify identities or transactions without disclosing sensitive information.
“This reduces opportunities for fraud and tampering, creating a safer online environment and enabling secure, private interactions that foster broader digital engagement,” Viglione said, adding:
“A more trusting business environment means lower costs and greater efficiency. This, in turn, frees up resources for companies to invest in expansion and innovation, which drives productivity and, ultimately, economic growth.”
The rise of blockchain might also reshape how legislation is written and enforced. Ideally, lawmakers should draft regulations that support, rather than restrict, these technologies. They’d allow tech-driven compliance to replace some of the traditional oversight mechanisms.
This flexibility can lead to a regulatory environment that encourages growth by reducing the need for micromanagement and allowing companies to refocus on more productive endeavors.
A Transitional Phase
“In my view, we’re in a transitional phase where major players are increasingly engaging with blockchain technology,” opined Viglione.
According to research conducted for Coinbase , the number of cryptocurrencies, blockchain, or Web3 initiatives announced by Fortune 100 companies has increased 39% year-over-year and hit a record high in the first quarter of 2024.
“Additionally, a survey of Fortune 500 executives found that 56% say their companies are working on on-chain projects, including consumer-facing payment applications. This increased activity from large corporations underscores blockchain technology’s growing importance and potential in various sectors. Who knows how much growth and prosperity we could unleash if SMEs took a similar approach?” Viglione elaborated.
Crypto’s Potential To Boost GDP
David Pinger, co-founder and CEO of Warden Protocol, said that “cryptocurrency has the potential to significantly boost global GDP by streamlining the inefficiencies of traditional financial systems and enabling a more accessible global economy.”
“At its heart, blockchain technology allows businesses and individuals to transact across borders with less reliance on intermediaries like banks and clearinghouses, reducing transaction costs, speeding up processes, and creating a more inclusive financial environment. This is especially important for areas where traditional banking infrastructure is inaccessible,” Pinger added.
Adding AI further enhances these benefits by simplifying the user experience and potentially automating routine financial tasks such as payments, settlements, and contract executions.
Pinger’s remarks seem to align with Bitwise’s Senior Investment Strategist Juan Leon’s observations from the Consensus conference earlier this year. Leon shared, “The intersection of artificial intelligence and crypto is going to be even bigger than people imagine. The two industries could add a collective $20 trillion to global GDP by 2030.”
“Smart contracts and decentralized applications simplify and reduce the barriers to accessing financial products and financial management tools, reducing the time and costs to individuals and businesses. This shift allows individuals and companies to focus more on value creation and improving their productivity, key factors for driving GDP growth,” Pinger explained.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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