- Bitcoin remains the primary choice for new and institutional investors, supported by ETF approvals and inflation concerns.
- Ethereum’s layer 2 scaling solutions have expanded DeFi adoption and diversified user portfolios.
Bitcoin and Ethereum layer 2 scaling solutions drove significant cryptocurrency adoption throughout 2024, as highlighted in a recent study. New investors, combined with increased activity in centralized exchanges and stablecoins, elevated the digital asset market to unprecedented levels.
Bitcoin continued to dominate portfolios of both retail and institutional investors. A report titled “2024 Crypto Survey: Exchange Use and Investor Behaviour” revealed that Bitcoin is the preferred asset for most new entrants into the market.
The approval of spot Bitcoin ETFs by the United States Securities and Exchange Commission (SEC) catalyzed this trend, attracting substantial investments and pushing Bitcoin’s price to a new all-time high.
These developments reflect Bitcoin’s enduring appeal as a store of value and a hedge against inflation. Stablecoins, often used for transactional purposes, complemented Bitcoin’s dominance by providing liquidity and stability.
Ethereum’s layer 2 solutions, aimed at addressing scalability issues, further enriched the ecosystem. These upgrades reduced transaction costs and enabled faster processing, expanding the reach of DeFi projects and driving demand for cryptocurrencies like Solana, XRP, and Ether.
Bitcoin and Ethereum have introduced Layer 2 solutions to address scalability challenges without altering their base networks. For Bitcoin, the Lightning Network facilitates fast, low-cost transactions by creating off-chain payment channels, while the Liquid Network supports faster, secure transfers and asset issuance.
Ethereum’s Layer 2 advancements include rollups, sidechains, and state channels, which reduce congestion and transaction costs. Rollups handle transactions off-chain, with Optimistic and ZK Rollups offering streamlined and secure processing, respectively.
Sidechains like Polygon enable independent transaction handling, while Plasma and state channels provide scalable, customized solutions for specific applications. Together, these innovations enhance blockchain functionality while preserving security and decentralization.
Adoption Patterns Across Regions
Asia is a key player in global cryptocurrency adoption, accounting for 40% of survey participants. Young populations across countries such as South Korea, Japan, and India played a role in driving this growth. Europe followed with 29% of participants, while North America accounted for 10%.
The study attributes these patterns to economic factors, including inflation and regional efforts to adopt cryptocurrencies as alternatives to traditional financial systems.
Binance’s Dominance Among Exchanges
Binance maintained its position as the leading centralized exchange, favored by 53% of respondents. The platform’s extensive range of trading options, high liquidity, and user-friendly tools contributed to its dominance.
Over 50% of survey participants noted greater profitability when using Binance, reinforcing its role as a vital hub for both novice and seasoned investors.