- Stablecoins are driving mass adoption of cryptocurrency
- Artificial intelligence is gaining popularity among cryptocurrency users
Venture capital firm A16z has released a report titled “The State of Cryptocurrencies in 2024”. Its main conclusion is that cryptocurrency usage is reaching new highs and shows no signs of slowing down.
The annual report says that the number of cryptocurrency owners worldwide reached a new high of 617 million this year, with an estimated 30-60 million active users.
The report also shows significant growth in blockchain activity, with 220 million unique crypto addresses using the technology at least once in September. Cryptocurrency usage has tripled since the end of 2023, reflecting the growing popularity and integration of cryptocurrencies across platforms and services.
This growth followed a prolonged “crypto winter” exacerbated by the collapse of FTX, an exchange led by now-disgraced CEO Sam Bankman-Fried.
However, the situation has changed dramatically. Bitcoin, which was trading at $28,000 a year ago, has now risen to $68,000, a significant increase of more than 142%. This growth indicates the restoration of investor confidence and renewed interest in the cryptocurrency market.
Stablecoins are driving mass adoption of cryptocurrency
According to the report, an important factor contributing to this growth has been the widespread adoption of stablecoins – digital tokens that are tied to the value of traditional currencies such as the U.S. dollar.
Stablecoins provide a level of stability not typically found in other cryptocurrencies, making them more attractive for everyday transactions and as a means of savings. Due to their reliability, they have become more common in a variety of applications, from money transfers and e-commerce to decentralized finance platforms (DeFi), further increasing overall activity in the crypto ecosystem.
According to the report, stablecoins have become more popular due to the decreasing cost of conducting cryptocurrency transactions. The fee for USDC, a popular dollar-linked stablecoin on Ethereum, has dropped by more than 90%, from $12 to $1. On Coinbase (COIN), the popular cryptocurrency exchange Coinbase’s network for sending and receiving cryptocurrencies, sending USDC costs less than a cent on average.
Artificial intelligence is gaining popularity among cryptocurrency users
The report indicates that visitors to ChatGPT and users of leading cryptocurrency sites overlap in many ways, indicating a strong connection between cryptocurrency users and artificial intelligence (AI). About one-third of cryptocurrency projects claim to use AI, the highest of any technology.
However, the study says that the combined use of cryptocurrency and AI could lead to increased centralization of power on the internet, as only the largest tech companies may have the resources to use advanced AI models. This is because the cost of training advanced AI models has quadrupled per year over the past 10 years.
On a more optimistic note, the report suggests that crypto projects that are already addressing centralization issues could use blockchain technology to mitigate the centralization risks associated with AI. Such an approach could potentially contribute to a more equitable distribution of technological power in AI.
“The problems associated with AI centralization are almost exactly the opposite of the decentralization opportunities that blockchain networks offer. Some crypto projects are already trying to address some of these challenges, including Gensyn (by democratizing access to AI computing), Story (by tracking IP addresses to help authors receive compensation), Near (by leveraging AI in user-owned open-source protocols), and Starling Labs (by authenticating and verifying the origin of digital media), to name a few,” the report said.
