It’s not easy to become a billionaire, but it’s not hard to figure out how some people get there. Take a look at any iteration of the Forbes annual billionaires list and it’s not a stretch to say that many of the names got there by one of three ways: Starting a business, stocks or real estate.
Indeed, there are exceptions such as the Walmart heirs and select athletes and entertainers, but the conventional “how to” wisdom on becoming a millionaire or billionaire rings true today. Entrepreneurship, real estate and stocks are fine ideas for reaching rarefied wealth status.
Predictably, some clients – particularly those in younger demographics – are apt to ask if it’s possible to become wealthy via crypto. The short answer is “yes”, but likely owing to bitcoin’s youth (it’s just 15 years old), there aren’t many bitcoin and crypto millionaires out there, let alone billionaires.
The recently released Crypto Wealth Report courtesy of Henley & Partners indicates there are 425 million crypto users around the world, but that’s resulted in just 88,200 millionaires, 182 centi-millionaires (holding crypto assets of at least $100 million) and just 22 billionaires.
For bitcoin, the largest digital currency, there are 210 million global users, but that’s led to 40,500 millionaires, 178 centi-millionaires and a mere six billionaires.
Good Signs for Crypto
From the perspectives of investing and usage cases, the future for crypto at large is bright. As noted above, there currently are 425 million crypto users around the world, but the global population is closing in on 8.1 billion. That implies even a modest increase in penetration by cryptocurrencies could stoke significant price appreciation by those assets.
There are good reasons for broader crypto adoption, including more efficient, less expensive transfer of money. As advisors know, this is a big money-maker for the traditional banking system, but crypto is disrupting banks’ grip.
“Right now, wiring USD 1 million between Europe and the USA takes a couple days to complete and USD 4,000 to USD 5,000 in fees. With crypto, the same sum moves between the two continents in seconds, literally, and costs fractions of a penny,” notes Jeff Opdyke of Henley & Partners.
Expanding upon the usage case point, Opdyke crypto can play an essential rule in mitigating counterfeiting in the massive global luxury goods market. Indeed, a practical application and one that could be compelling for investors.
“Manufacturers have no way to combat the theft effectively, which means consumers have no way of truly knowing if what they’re buying is Louis Vuitton or Lewy Vutton,”opines thee analyst. “With crypto, manufacturers and consumers can track every step of the manufacturing and transportation process to know that a particular USD 3,500 Louis Vuitton OnTheGo bag was created from a particular piece of leather sourced from particular leather workshop in Spain. Technically, you could track back to the individual cow from which the leather originated.”
History Could Be Instructive
Today’s numbers of crypto billionaires and millionaires aren’t staggering, but think of it this way. Twenty-five years ago, there weren’t many internet millionaires. Obviously, that’s changed.
Point is, like internet stocks in the 1990s, crypto has gone through a boom/bust cycle. If history rhymes or repeats, that could be beneficial to bitcoin and some of its peers.
“Now we’re in the stage where today’s crypto companies are building the future — the next Amazon, the next Google, eBay, Uber, take your pick. Those who recognize that — who clearly see the analog to the internet, circa 1999 — are the ones who are going to reap the rewards,” concludes Opdyke.
Related: How To Discuss Crypto With Clients