Cryptocurrency refers to a digital or virtual currency that uses encryption techniques to regulate transactions and generation of units of currency. Cryptocurrencies such as Bitcoin, Ethereum and Ripple are decentralized digital currencies protected by cryptography. The growing popularity of cryptocurrency mining has substantially driven the demand for mining hardware equipment such as ASIC chips, GPU chips and FPGA chips over the past few years. Growing investments from venture capitalists in cryptocurrency projects and increasing merchant acceptance of digital currency payments are some of the key factors boosting the growth of the cryptocurrency market. While lack of mainstream adoption and regulatory ambiguity still pose challenges, the global cryptocurrency market is estimated to be valued at US$ 37.9 Bn in 2024 and is expected to exhibit a CAGR of 14.% over the forecast period 2023 to 2030.
Key Takeaways
Key players operating in the cryptocurrency market are Bitmain Technologies Ltd. (Beijing, China). Some of the leading players in the cryptocurrency mining market have strategic collaborations with ASIC chip manufacturers to design specialized chips optimized for mining specific cryptocurrencies such as Bitcoin and Ethereum. In addition, key players are focusing on mergers and acquisitions to strengthen their product portfolio and geographic footprint.
The growing popularity of digital currencies among millennials and Generation Z represents a major growth opportunity for cryptocurrency market players. Ease of cross-border transactions without any intermediaries and negligible transaction fees are some of the attractiveness of cryptocurrencies for young consumers. Advancements in blockchain technology that allow for faster, more scalable and energy-efficient transaction processing could further boost the global adoption of cryptocurrencies.
The Middle East and Africa region is expected to witness fastest growth in adoption of cryptocurrencies over the next few years. Growing internet connectivity in developing countries and presence of young demographics embracing digital currencies will drive cryptocurrency market expansion outside developed markets such as North America and Western Europe. Rising awareness about application of blockchain beyond cryptocurrencies will also support cryptocurrency demand in emerging nations.
Market Drivers
Growing merchant acceptance of cryptocurrencies as payment option will drive greater usage of digital assets for commercial transactions. Regulatory clarity on cryptocurrencies provided by authorities will also encourage mainstream adoption. Expanding application of blockchain technology beyond cryptocurrencies in industries such as BFSI, healthcare and supply chain will facilitate network effect and boost the overall user base.
Market Restrains
Volatility in cryptocurrency prices pose major challenge for their mass adoption. Prices of Bitcoin, Ethereum and other cryptocurrencies have experienced boom and bust cycles raising concerns over their viability as currencies. Concerns around exploitation of cryptocurrencies for money laundering and other illegal activities if not regulated properly can negatively impact the market growth. Absence of global standards and lack of consumer protection also limits the expansion of cryptocurrencies.
Segment Analysis
The cryptocurrency market is dominated by Bitcoin, which holds more than 40% market share. Bitcoin is the most popular and widely accepted cryptocurrency globally. It was the first decentralized digital currency launched in 2009 and the first peer-to-peer payment network. Ethereum stands at the second position, with a market share of nearly 20%. Ethereum was launched in 2015 and is preferred for its capability of supporting smart contracts and decentralized applications. Other prominent cryptocurrencies in terms of market share include Binance Coin, Tether, Solana,Cardano, Ripple, Polkadot etc. These cryptocurrencies together account for around 30-35% of the total cryptocurrency market.
Global Analysis
North America dominates the cryptocurrency market with more than 35% share, primarily driven by increased adoption of cryptocurrencies for payments and investments in the US. Increased digitization and popularity of blockchain technology underpin growth in the North American region. Europe is another major regional market with around 25% share. Countries like UK, Germany, and Russia are major European markets for cryptocurrencies. Strong blockchain infrastructure along with government support drives adoption in the region. Asia Pacific is identified as the fastest growing regional market for cryptocurrencies, especially China and India. Continuous innovations in blockchain technology and growing digitization are key factors aiding growth of cryptocurrency in Asia Pacific region.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it