Crypto Usage Setting Records Amid Regulatory Uncertainty, A16z Says in Report

The report showcases an extraordinary surge in blockchain usage, as approximately 220 million unique addresses engaged with the technology at least one time during September. This figure represents a threefold increase compared to the numbers seen towards the end of 2023.

According to the company, a major factor fueling its expansion is the increasing use of stablecoins – these are digital assets that mirror conventional currencies such as the US dollar.

According to a16z Chief Technology Officer Eddy Lazzarin in an interview with CoinDesk, stablecoins have achieved an unprecedented degree of alignment between their offerings and market demand. The issuance, transfer, and utilization of stablecoins are currently surging across the board.

16z, well-known for its initial investments in Facebook and Airbnb, now holds significant influence in the cryptocurrency sector. They support key players like Coinbase, Uniswap, and Solana within this dynamic market.

According to a16z’s 2024 report, they warned that because of unclear regulations regarding cryptocurrency, both in the United States and internationally, there has been an increase in the creation and use of speculative meme-based coins.

Over the last year, memes and celebrity endorsements in the digital asset sector have revived some retail interest in crypto. However, there’s ongoing apprehension that these assets might tarnish the industry’s reputation due to their frequent association with scams, rug pulls, and other unscrupulous activities.

In simpler terms, Lazzarin stated, “It’s ironic because it seems easier to understand the rules for creating a fair and legal memecoin than it does for launching a legal token tied to a decentralized network, which I refer to as ‘network tokens.’

16z co-founders Marc Andreessen and Ben Horowitz have declared their backing for Donald Trump in the 2024 elections. They emphasized that Trump’s pledge to halt the illegal and anti-American actions against cryptocurrencies was a significant factor influencing their decision to endorse him.

After Joe Biden dropped out of the presidential race, Horowitz personally contributed to Kamala Harris’s campaign, recognizing the intricacies and challenges in deciding who to support amidst the complex political environment.

As an analyst, I’ve consistently highlighted the unpredictability of U.S. regulations in our previous reports. However, this year’s edition brings a new focus on the increasing role of cryptocurrency in political discourse, with significant mentions in key swing states like Pennsylvania and Wisconsin. The report suggests encouraging signs of bipartisan efforts aimed at fostering regulatory clarity within the U.S., which could potentially pave the way for a more defined landscape in this sector.

16z’s analysis highlights that significant advancements in blockchain technology have driven down the expense of processing transactions, notably for stablecoins such as Tether (USDT) and USD Coin (USDC), to record lows.

In simpler terms, the Ethereum EIP-4844 update encouraged the creation of more cost-effective “layer-2” blockchain systems such as Coinbase’s Base network, as highlighted by Lazzarin.

He mentioned to CoinDesk that sending USDC on the base platform is cheaper than a penny, and this cost-effective trend has remained consistent even as usage increases.

Speaking from my personal experience as a crypto investor, I’ve noticed a significant shift towards more contemporary blockchain networks such as Sui and Solana. Remarkably, these innovative platforms have slashed transaction costs by nearly 99% when it comes to sending U.S. dollars in the form of stablecoins across international borders. This is according to Lazzarin’s recent observations.

For the year 2024, just like in past years, a16z has released a data visualizer tool called the “Crypto Index” alongside their annual report.

Despite a decrease in some crucial indicators like “active developers” and “interested developers” over the last year, a16z’s overall “crypto index” score, which assesses the significance of various crypto advancement factors, is approaching a record high.