February 2024

Path to the Next Billion Users

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Over the coming decades, digital assets are going to embed themselves into our digital lives. In some cases, this will be plainly obvious, with digital wallets being downloaded to hundreds of millions of smartphones.

In other cases, the use of digital assets will slip into the fabric of digital infrastructure and be hidden from consumers. This month, we are going to dig into the path to the next billion users of digital assets and crypto. There are three areas that we will focus on: payments, the metaverse and DePIN (decentralized physical infrastructure networks). We will start with the more obvious use cases around payments, before delving into some more obscure but compelling applications. Doing so will offer a glimpse into the future that CMCC Global is investing in and that you have a front-row seat to.

It is challenging to determine the exact number of crypto and digital asset users. Coinbase has just shy of 100m users, and it is estimated that there are over 425m digital asset users worldwide, up from just 5m users in 2016. This is less than 10% of the 5.4bn internet users, although many reported crypto users are not active, with only around 10% of Coinbase users being active monthly. As a result, there is a significant growth opportunity for digital asset adoption as every Internet user is a potential crypto user. There is room to 10x digital asset users, and if it is assumed that only 10% of current users are truly active, then there is 100x growth potential to bring active crypto users in line with active Internet users.

Further adoption of digital assets is coming, and the most obvious use case is in payments. The full title of the Bitcoin whitepaper is “Bitcoin: A Peer-to-Peer Electronic Cash System”. Payments was the original use case that Satoshi envisioned when creating Bitcoin and it is in some senses a failure that crypto has not yet managed to reach its full potential in this regard. Pure play crypto payment gateways have struggled to gain traction. The Bitcoin Lightning Network and Solana Pay are two permissionless systems that have been attempting to gain real world adoption. The bottleneck they have faced is in usability and consumer understanding of crypto wallets and pure decentralized payments. Consumers and merchants are familiar with the use of credit cards and credit card terminals but are not yet up to speed with native crypto payments.

This has left an opening for hybrid payment solutions. Last week, it was announced that CMCC Global’s Titan Fund was one of the lead investors in a new payment gateway called Oobit. This investment round boasted a strong group of investors including the investment arm of Tether, 468 Capital and the Solana co-founder Anatoly Yakovenko. The innovation that Oobit has pioneered is that users of the mobile app can pay for purchases using crypto, while the merchant receives fiat currency. The tap-and-pay feature can be used at any point of sale that accepts Visa or MasterCard, as demonstrated in this video by the crypto OG Roger Ver. This opens an addressable market of over 100m retailers globally.

Oobit has a huge opportunity in front of it. The platform is addressing the common barriers of crypto payments including the complex and intimidating process of buying, selling and securely managing digital assets. The company straddles both the crypto and more traditional fintech space and has the potential to bridge the gap between old and new payment platforms. In regions such as South East Asia and Latin America, Oobit can become a first mover in updating payment infrastructure and reducing costs for some of the more underserved financial services users. Payments is a universal use case and one that crypto is perfectly placed to solve, given that blockchain is a combination of both a financial services and Internet technology. We envisage the first billion crypto users entering the market through payments, given that they can be instant and cheap, and remove the middleman tax of financial institutions.

While payments can be vastly improved by using crypto, there are existing solutions and the payment space has existed for centuries. A brand-new part of the digital economy is the metaverse. This blends technologies such as virtual reality, augmented reality, and blockchain technology to create immersive, interactive digital environments where users can work, play, socialize and participate in digital experiences. This is the frontier of what the Internet is capable of and crypto plays a pivotal role in enabling transactions, governance, and the ownership of virtual assets.

In September 2023, we led the investment round in Animoca Brand’s latest metaverse project called Mocaverse. This investment was through our Digital Asset Funds as well as our Titan Fund. Given the strength of Animoca and its ecosystem of over 450 web3 projects, it is well placed to become a leader in the metaverse space. Mocaverse is well positioned to become a massive success, in the first 10 weeks, 300,000 unique Moca IDs were minted. That number has now breached 700,000 IDs. Mocaverse is building web3 native tools that empower users to create their digital identities, accumulate reputation, earn and spend loyalty points, and access the Mocaverse ecosystem.

The metaverse will provide consumers with a new way to experience the Internet, which is why it could be a catalyst for onboarding hundreds of millions of new digital asset users. The key innovations here include:

  • Immersive experiences: with new VR and AR devices such as Apple’s Vision Pro, we are on the cusp of a user experience revolution. Virtual worlds will feel more realistic and engaging, with screen-based interactions being replaced by 3D spaces that feel lifelike.
  • True digital ownership: using NFTs, users can own, buy and sell virtual assets in a secure and transparent manner. This represents a shift from traditional centralized models of online platforms.
  • Economic opportunities: users can monetize virtual real estate, create and sell digital goods, offer virtual services and host paid events within a digital space. This will establish a new virtual economy that parallels the physical world.
  • Social collaboration: beyond education and commerce, the metaverse offers a space for social collaboration such as education, conferences and community gatherings, allowing a global audience to connect and collaborate in new ways.

Every user will need a digital wallet to navigate the metaverse. Whether or not the user is aware of its nature, for true digital ownership to be possible, this wallet must be crypto enabled.

Moving out further into the arc of the new and unproven, DePIN, short for Decentralized Physical Infrastructure Networks, represents a significant shift in how infrastructure and real-world utilities are deployed and managed using blockchain technology. The concept allows the operation of physical infrastructure through the efforts of individuals and businesses, leveraging token rewards to facilitate participation. DePIN today encompasses various sectors, including wireless networks (where consumers share their Internet services to create an ad hoc network in return for tokens), energy services, health, data storage, and mobility. It promotes a more equitable, efficient, and decentralized model of infrastructure development compared to traditional, centralized approaches.

DePIN's main appeal lies in its ability to offer community control through decentralization, fair pricing, cost-efficient operation, permissionless participation, and incentivization for providers. This month, through our Digital Asset Funds, we invested in a DePIN layer 1 project called Peaq. This is a blockchain platform that is designed for real-world applications and already has over 100,000 machines attached to the network. For example, ELOOP is one initiative using Peaq that has over 100 tokenized Teslas in Vienna. These Teslas have their own Peaq IDs and crypto wallets and are used for car sharing on an Uber-style app. Another example is NATIX, which utilizes over 40,000 smartphone cameras to map the world in real time using Peaq. Should they be successful, DePIN projects like Peaq could lead to millions of consumers using blockchain technology to contribute resources to community-owned infrastructure.

The next billion crypto users are coming. It may be through obvious use cases such as payments, through newer segments of the digital economy such as the metaverse or through previously impossible applications that DePIN is making a reality. At CMCC Global, investing in companies and networks that will drive digital asset adoption is a key focus. Part of our mission is to enable the world to move towards decentralized networks that are more equitable, more inclusive, cheaper and improve efficiencies. We are excited to be supporting leading teams globally that share this motivation and look forward to sharing their successes with you and giving you a front-row seat to this digital transformation.