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The River exchange platform has published a very interesting report on bitcoin. We are at the very beginning of an adoption rate similar to that of the internet. The world is adopting bitcoin faster than any other asset, despite the current turmoil in the crypto market . Here is a series of data gathered by River to understand that we are only at the very early stages. For example, the number of publicly traded companies that have adopted bitcoin is less than 1%. The S&P 500 and NASDAQ only have 2 and 3 companies respectively that have made bitcoin their main cash asset. It is estimated that 18 countries hold bitcoin. Most obtain it through mining. This includes Bhutan, El Salvador, Iran, Oman, and Ethiopia. Others have acquired it through seizures in criminal cases (China, USA, UK). Some, like the United Arab Emirates, purchase it directly. “Given the increased geopolitical uncertainty and the global trend to abandon U.S. Treasury bonds as reserve assets, it is possible that at least one G20 country will announce holding bitcoins for strategic purposes within the next four years”, estimates River . “If the dollar remains the uncontested global reserve currency […], countries like Russia have begun to use alternative currencies, including bitcoin, for international trade”. Ultimately, much will depend on the United States where Senator Cynthia Lummis is working hard to convince Congress to buy between one and five million BTC… However, River estimates that the probability of such a scenario is “low”. River does believe, however, that it is likely that Congress will vote in favor of an exemption from the capital gains tax for small payments of less than $200. We will see if Donald Trump dares to buy between 5% and 20% of the bitcoins in order to erase part of the debt in the coming years. According to River, bitcoin adoption is only “3% of its full potential”. Three main indicators lead to this figure: The upside potential remains immense… In the long term, River expects a single bitcoin to be worth several tens of millions of dollars and to replace the dollar as the international reserve currency. An opinion shared by yours truly. The report highlights that in 2024, thanks to the “halving”, bitcoin became harder to obtain than gold! The halving refers to the part of the protocol that, every four years, halves the rate of BTC issuance. About 900 were created per day before April 2024, compared to 450 today. Meanwhile, the number of dollars in circulation has increased by 3.7% (more like 7% on average). This increase was 2% for gold in 2024 and only 0.85% for bitcoin. Thus, after 18 years of existence, more than 94% of the 21 million bitcoins have already been issued. There are precisely 19.82 million BTC in circulation at the time of writing. These bitcoins are mostly held by individuals (70%). Next are ETFs like BlackRock’s with 6% of the BTC. Companies like Strategy (formerly MicroStrategy) hold 4.4% and it’s 1.4% for governments. It is estimated that nearly 10% of the BTC are lost forever. These figures could change significantly in 2025 if the United States does indeed decide to purchase 20% of the BTC as Michael Saylor suggests. Wait and see… Regarding the protocol, 115 developers have actively worked on the code over the past year. They made over 2,500 proposals to modify the code, totalling 276,000 lines of code that were adjusted. Thirteen sponsors fund these developers, with three newcomers in 2024. Good news for the decentralization of the network. For instance, Blockstream, Brink, Spiral, etc. The year 2024 was marked by many proposals aimed at modifying the protocol. However, the emergence of “inscriptions” (Ordinal, BTC-20, etc.) has frozen several initiatives due to the disagreements they caused within the community. As long as the developers and the community at large haven’t reached a consensus, the probability, timeline, and implementation of proposed changes will remain uncertain. Most proposals aim to increase the number of people who can take possession of their bitcoins. However, the figures show that this is absolutely not a priority, hence the status quo. Not your keys, not your coins! Decentralization relies on a network of nodes and miners. The former numbered 21,700 at the end of 2024, representing an 11% increase year on year. Bitcoin Core is the version of the protocol installed by 98% of the nodes. One of the competing clients is “Knot”. Its recent success is due to the fact that its “filters” have been updated to prevent the inscriptions of images and other unwanted arbitrary data in the blockchain. This was THE drama of 2024… The decentralization of miners is also on the rise. While they were mostly located in China just a few years ago, many can now be found in the United States (36%), Russia (16%), the United Arab Emirates (3.75%), and Paraguay (3%). The Middle Empire is now in third place with 14% of the hash rate. The computing power of the network has been increasing on average by 107% per year since 2016. It was +55% in 2024. We are very close to 800 exahash! In other words, miners perform 800 trillion trillion calculations per second. That said, only 9 countries have more than 1% of the hash rate and barely 28 countries have more than 0.1%. Finally, note that the share of the hash rate managed by publicly traded companies has increased by 11%, reaching 35.2%. Another even more important data point: the concentration of pools. There is some improvement as the share of the three largest pools has decreased. However, it remains very uncomfortably above 60%. The concentration of pools is a threat because they are the ones that choose which transactions go into the blocks. The risk being that some transactions may be censored. This has already happened. The River report also discusses other topics such as the growth of the Lightning Network. On this subject, check out our article Bitcoin: this network that changes everything.

The Gordian knot of these intertwined challenges doesn’t seem to faze industry leaders, though. Vitalik Buterin recently tweeted his optimism regarding the pace of development towards a “smooth user experience across the entire ethereum-verse,” while Jayant Krishnamurthy, CTO of Douro Labs, which is a core contributor to decentralized oracle network Pyth, believes that the ecosystem is already accommodating new paradigms. He says: “Many projects have aligned their tech stacks to support a multi-layer, multi-chain world. For instance, Pyth uses a hub-and-spoke model for data distribution, providing a uniform experience for users and developers across various environments. Similarly, Wormhole and other bridge solutions facilitate fast and reliable asset transfers across different Layer 2 networks. As these solutions continue to iterate, evolve, and improve, the risk of fragmentation should decrease, making interoperability easier.” However, he also remains circumspect about the fact that many of these challenges are likely to remain in the longer term, adding: “Fragmentation into multiple layer 1s and 2s is inevitable – it’s the simplest solution to provide more bandwidth (transactions per second) for users. A layer is just a big computer, like a mainframe in web2. In the same way that mainframes didn’t scale to meet user demand for compute in web2, a single layer won’t scale in web3.” So layers are here to stay, a necessary function of the fact that more users necessitate more infrastructure. A key question will be: how can the ecosystem shift from being one that’s continually chasing the tail of its own problems to one that can deliver the features and functionality users and developers need without creating more issues?