The latest entrant to the embedded finance space is Crypto, or Crypto Solutions as a Service, and it's set to disrupt traditional ways of operating.
Learn how crypto-led growth is an easy way to discover, engage, and grow customers through the right crypto products.
Cryptocurrency is one of the most powerful forces in business today. It’s constantly growing and evolving, and has the ability to attract new customers and increase revenue like no other product can. At Cybrid, we call this process Crypto-led Growth.
Read on to learn about the rapid adoption of crypto, who the top crypto buyers are, and why adding crypto to your roadmap can help you attract new customers, retain the ones you have, all while increasing user engagement and revenue. If you’re looking for a powerful way to drive growth for your company, cryptocurrency could be the answer!
|An easy way to discover, engage, and grow customers through the right crypto products|
Crypto Adoption is Growing Rapidly
The cryptocurrency market is growing at an unprecedented pace. If you haven’t been paying attention, you may have missed that the total market has been hovering around the $2 Trillion dollar mark for the last 12 months, and nearly touched $3 Trillion for a brief period late last year.
To put this in perspective, the entire gold market cap is about $12.5 Trillion. Gold has been around for a long time, and was generally used to back the worlds entire financial system, known as the ‘gold standard’, on-and-off between 1880 and 1971. Don’t get me wrong, that’s a good 91 year run. But crypto is a little over a decade old, and it’s already worth 16% of the gold market, with Bitcoin alone representing over 6% of that.
Market cap aside, the user base of crypto is ballooning, now at about 300 Million users worldwide, or about 4% of the world’s population. There’s an expected compound annual growth rate (CAGR) of approximately 56% projected through 2025. If this growth rate holds true, there’s going to be another 700 million users participating in the crypto market three years from now, representing a new user segment and significant growth opportunity for many businesses.
Millennials and Gen Z are the Largest Cohort
While not making up the entire market, Millenials and Gen Z represent the lion’s share of new investors in the cryptocurrency space. When surveyed at the end of 2020, about 46% of people aged 35–44 were interested in buying crypto, and a whopping 55% of people aged 18–34 showed high interest.
You might expect that this is a very male dominated cohort, but that is quickly changing. While men do make up a chunk of it, about 1-in-3 American women also plan to buy crypto in 2022, according to a BlockFi survey. They heavily skewed towards top coins like Bitcoin or Ethereum, but interest is expanding.
Millennials alone represented about 40% of new investors in 2020, where both cryptocurrency and NFT’s (Non-fungible Tokens) are now key considerations in their investment portfolios. Many have become disillusioned with traditional banks and service providers, and are looking for areas that can give them outsized gains, while putting more wealth in their pockets instead of the banks.
With growing inflation rates, recently topping 5.7% in Canada and a gigantic 8.5% in the US, can you blame them? They’re desperately looking for solutions that can cater to their rising need of alternative investment opportunities. Organizations can deliver on these new desires with a variety of crypto products.
Crypto is Going to Change the Game
If you’re just taking a look at the space, you’d be forgiven in thinking that crypto is just a bunch of coins, like Bitcoin, Ethereum, or Doge, and some high priced NFT’s. But there’s a lot more to it than that.
Newer cryptocurrencies like Ethereum, and now Solana, are ushering in the era of Decentralized Finance, or DeFi. This represents a collection of financial services that are entirely run on blockchains by specialized smart contracts (basically small bits of programming), and are beginning to offer a wide variety of financial mechanisms that we normally only see in the traditional finance space.
Crypto also enables a whole new type of participation. When you put money in the bank, the banks use it to make money on the back end, rarely sharing much of that with customers. Cryptocurrencies are architected differently, because cryptocurrency holders can pledge their coins to help run the cryptocurrency network, and they’re paid an interest rate (often referred to as rewards) for this participation. How cool is that?
Whether it’s payment rails, borrowing & lending, participation in network operation through staking or liquidity pools, and now even bond markets— there’s something for everyone in the new suite of DeFi finance tools.
Crypto as a Strategy for Growth
Crypto can be daunting, for sure. But you don’t necessarily have to dive 100% in. While everyone is talking about crypto, it’s still pretty mysterious for most people. This is why a strategy of gradually increasing the Crypto IQ of your customers can let them put a toe in the water, without jumping in completely.
In practice this means you don’t have to launch full on crypto trading, or something more advanced like staking, as your first product. A lot of organizations are thinking about how they can replace or augment their rewards programs with crypto, and this an easy stepping stone to drive engagement.
If you do want to be more on the leading edge, launching a basic crypto trading service where customers can buy popular coins like Bitcoin, Ethereum or Solana can help draw in even more customers. This often has the knock-on effect of not only reducing customer acquisition costs, but also increasing their monthly or daily usage of your solution, while driving a lucrative revenue stream. If you’re organization is trying to improve your CAC to LTV ratio, then taking a look at a crypto-led growth strategy may be the perfect thing.
Crypto is quietly changing the future of finance, in the same way that the Internet and Smartphones drove a completely new type of connectivity and economy. The organizations releasing crypto-based products are seeing higher engagement in their platforms, while rapid customer acquisition is leading to many up-sell and cross-sell opportunities. With increasing competition for new customers, getting the edge with crypto is a way to stand above the crowd.
Regardless of which avenue you choose, taking a look at how to incorporate crypto as part of your company strategy should be a critical topic for boardroom discussions. You might just be surprised at how fast the crypto market is evolving, and what that could mean for your business in 2022.
— Lee Cocking,
Head of Product @ Cybrid