Bitcoin Adoption in Early Stages

New research from River Intelligence reveals that Bitcoin is currently in the early stages of adoption, suggesting that significant developments are forthcoming. River outlines that the current Bitcoin adoption level is comparable to that of the Internet in 1990 or social media in 2005.

On Feb. 25, 2025, a Bitcoin-only institution, River Financial Inc., released a study entitled “What’s Driving Bitcoin Adoption in 2025?” The report covers topics such as the current state of the Bitcoin protocol, the Lightning Network growth issues, the specifics of the latest bull market, the Bitcoin custody landscape, and more.

Table of Contents

• Adoption is in the early stages
• Value and scarcity
• Lightning Network
• Bitcoin custody
• Decentralization

Adoption is in the Early Stages

The report shows that more governments are embracing Bitcoin. Although countries like China, Afghanistan, and Venezuela maintain prohibitive crypto policies, an increasing number of nations are adopting crypto-friendly regulations. By 2024, Russia and Bolivia had legalized Bitcoin mining, while Argentina and Turkey allowed Bitcoin payments. As of 2024, 18 countries owned Bitcoin through various avenues.

Despite the hype and growth surrounding Bitcoin, the study finds that adoption is still in its early stages, estimating that Bitcoin is only 3% of its full potential—similar to the early Internet or social media. Currently, only 4% of the global population owns Bitcoin, and institutions have largely avoided allocating it within their portfolios.

Bitcoin continues to be in its formative stages, with changes to the Bitcoin code and increasing entities involved in its development aimed at enhancing security, scaling, and transaction flexibility.

Value and Scarcity

Bitcoin’s scarcity is noted as a key driver of its value. The study points out that the Bitcoin supply was growing slower than that of major fiat currencies and gold in 2024.

Bitcoin has shifted more towards being a store of value rather than an everyday payment method, with average transactions in 2024 valued at $17.8k. The annual value transferred through Bitcoin has exceeded $1 trillion since 2021, reaching $3.43 trillion in 2024.

Despite the market capitalization of Bitcoin exceeding $2 trillion in 2021, the current bull market is driven more by Bitcoin ETFs and businesses than by the global money supply. In 2024, nearly 70% of Bitcoin is owned by individuals, while businesses increased their holdings dramatically.

As of Dec. 31, 2024, over 1.5 million bitcoins are lost, while a significant portion is held by entities and contracts. Locked bitcoins exceed 2.7 million, representing about 13% of the total supply.

Lightning Network

The Lightning Network’s growth has been sluggish due to a lack of merchant acceptance of Bitcoin and low transaction fees. Increasing acceptance among merchants could enhance usage of the Lightning Network.

Bitcoin Custody

In 2024, Bitcoin custody saw maturation, with the share of bitcoins held on exchanges decreasing significantly. Approximately one-third of bitcoins are held by ETFs and DeFi platforms. The overall losses due to hacks have decreased, partly due to the adoption of Proof of Reserves standards in the industry.

Decentralization

The study highlights growth in both the number of active developers and Bitcoin’s hashrate. While the number of nodes has been steadily increasing, a significant portion of Bitcoin’s hashrate is controlled by a few companies—primarily in the U.S., Russia, and China.

Countries like Russia have maintained a strong pro-crypto stance, influencing the global mining landscape.