Key Points
- Bitcoin is in its early adoption phase, akin to the Internet in 1990 or social media in 2005, according to River Intelligence research.
- The study by River Financial Inc. covers topics such as Bitcoin protocol, Lightning Network, and the Bitcoin custody landscape.
New findings from River Intelligence suggest that Bitcoin is currently in the early stages of acceptance, hinting at significant developments yet to unfold. For example, it is stated that the present level of Bitcoin adoption is similar to the Internet in 1990 or social media in 2005.
Insights from the River Financial Inc. Study
On February 25, 2025, River Financial Inc., a Bitcoin-only institution, published a research paper titled “What’s Driving Bitcoin Adoption in 2025?” This report discusses the current state of the Bitcoin protocol, the Lightning Network’s growth issues, the specifics of the latest bull market, the Bitcoin custody landscape, and more.
The research shows an increasing number of governments embracing Bitcoin. Despite restrictive crypto policies in China, Afghanistan, and Venezuela, other nations are adopting crypto-friendly regulations. By 2024, Bitcoin mining was legalized in Russia and Bolivia, Bitcoin payments were legalized in Argentina and Turkey, and many other countries permitted investment in BTC or Bitcoin ETFs. As of 2024, 18 countries owned bitcoins through government-backed mining, seizures, purchases, donations, and other acquisition methods.
Despite the rapid growth and involvement of governments and corporations worldwide, Bitcoin adoption is still in the very early stages. Bitcoin is only 3% of its full potential, comparing it to the Internet in 1990, social media in 2005, or online banking in 1996. The study cites metrics such as only 4% of the global population owning Bitcoin, institutions largely ignoring BTC for portfolio allocation, and the total addressable market being below 1% of an estimated amount.
The report also highlights the continuous volume of changes made to the Bitcoin code and the increasing number of entities involved in Bitcoin’s development and the upgrade process. These changes aim to enhance the protocol’s security, network scaling, and improve Bitcoin storage and transactions flexibility.
Bitcoin’s Value and Scarcity
The study emphasizes Bitcoin’s scarcity as a key driver of its value. In 2024, the supply of Bitcoin was growing slower than the supply of all major fiat currencies and gold. Bitcoin is proving to be more of a store of value than a means of everyday payment. The average transaction value in 2024 was worth $17.8k, according to River. Since 2021, the annual amount of value transferred via Bitcoin has been over $1 trillion. In 2024, this amount reached $3.43 trillion.
The study also points out that the Bitcoin market capitalization exceeded the $2 trillion mark in 2021, making Bitcoin the world’s 11th biggest currency in the USD equivalent. The main price drivers in 2024 were Bitcoin ETFs and businesses, with hedge funds and investment advisors playing a crucial role. However, Bitcoin remained “people’s crypto” with almost 70% owned by individuals, 4.4% by companies, 6.1% by funds and ETFs, and only 1.4% by governments.
As of December 31, 2024, over 1.5 million bitcoins (7.5% of the total supply) are considered lost, while another 968k bitcoins (4.6% of the total supply) are associated with the Satoshi addresses. Nearly 1% of the supply is held by bankrupt estates and smart/DeFi contracts. The total amount of locked bitcoins exceeds 2.7 million (about 13% of the total supply).
Lightning Network and Bitcoin Custody
The Lightning Network hasn’t been growing very fast lately. The study suggests that the reason is that too few merchants are willing to accept Bitcoin. Another reason for the slow growth of Lightning Network is the relatively low BTC fees.
In 2024, Bitcoin custody matured, according to the study. The share of bitcoins held on crypto exchanges has dropped significantly from over 70% in 2021–2023 to just 56.6% in 2024. ETFs and DeFi platforms hold around a third of all bitcoins.
The number of bitcoins lost to hacks or for other reasons has been constantly decreasing over the last 10 years. After the FTX collapse, Proof of Reserves became the industry standard, drastically reducing the chances of losing BTC on collapsing crypto exchanges.
Decentralization
The number of active developers is increasing, and more importantly, the number of nodes and the network hashrate volume are constantly growing. The main issue with Bitcoin’s decentralization pointed out in the study is the mining pool distribution. Over a third of the total hashrate is produced by a few public companies. The top three mining pools produce around 60% of the total hashrate. The countries leading Bitcoin mining are the U.S. (36% of hashrate), Russia (16% of hashrate), and China (14% of hashrate). The share of the U.S. and China decreased in 2024 while Russia became increasingly pro-crypto.
