16 Mar Bitcoin is everywhere, except in US consumer wallets
It seems like bitcoin is everywhere these days. Except in your wallet according to new research from Finder.
Only 7.95% of US consumers have actually invested in cryptocurrency according to the survey of 2,001 US adults. Most of these new cryptocurrency investors are millennials (17%) while 8.75% were Gen Xers and only 2.24% Baby Boomers.
The report highlights the barriers to bitcoin and crypto currency adoption:
“Of those who haven’t purchased crypto, 7.76% say they have plans to purchase crypto in the future. The reason from 40.01% of those who haven’t yet purchased crypto, representing more than 90 million Americans, is because they are disinterested or they think there’s no need. This reason is followed by 35.02% who say that the risk is too high, 27.04% who find it too difficult to understand and 17.97% who say it’s a scam.”
The most popular coins were bitcoin and Ether but just 5% own bitcoin, fewer than 2% hold Ether and less than 1% own Ripple. The average amount of bitcoin purchased by investors was $3,453.89.
NYU Stern School of Business Prof. Aswath Damodaran told CNBC, “Bitcoin has taken over the public imagination. But it’s a very small phenomenon.”
Barriers to bitcoin
The reasons why consumers haven’t yet invested in cryptocurrency were not entirely surprising but did offer some interesting contrasts by gender.
For 44% of women and 35.3% of men, the biggest barrier to investing in cryptocurrency was consumers saw no need for it or were disinterested in digital currencies.
39.8% of men and 30.9% of women said cryptocurrency is too high risk for their taste. 30% of females found it too complicated to understand while 23.6% of men also agreed. There’s work to be done here by developers.
It’s a scam or a bubble said men
Interestingly, only 12.8% of women thought cryptocurrency was a scam while twice as many men (24.0%) thought it was a scam.
Only 9.9% of women thought cryptocurrency was a bubble while nearly four times as many men (35.3%) believe it is a bubble. Hey guys, pessimistic or what?
Both women (11.8%) and men (11.0%) agreed cryptocurrency was too difficult to use. Again, another message to developers and creators. A big learning curve lowers adoption.
Cost was the lowest barrier to investing in cryptocurrency with 5.4% of women and 6.2% of men saying there were too many fees.
How are investors choosing cryptocurrency?
Research shows that these early adopter-investors are doing their own research and drawing their own conclusions based on media reports and sentiment or exposure:
“Of those who own cryptocurrency, more than half (54.09%) chose their particular coin or token because they did their own research and it came out on top. These same crypto owners are twice as likely to have completed their own research than rely on the coin’s social media sentiment or presence (27.04%). Two in five (40.25%) cryptocurrency holders appear to have factored in their coin’s presence among news reports when making their decision, and 41.51% simply followed the crowd and selected their coin because a peer made money off of it.”
For nearly half (41.5%) of the sheep, I mean investors, it was all about FOMO (fear of missing out) and following the crowd or because someone they know made some money on their cryptocurrency investments.
What’s ahead for the cryptocurrency marketplace?
From my perspective, the industry has three key challenges in increasing consumer interest and adoption of cryptocurrency.
First, the biggest barrier is the lack of interest and understanding of the need for bitcoin and cryptocurrency. There is neither a perceived business use case nor a compelling reason for consumers to use cryptocurrency at this time. It’s hard to understand, not easy to use and not easy to spend like other currencies.
Second, the fear of a bitcoin bubble, concern about hackers and widespread coverage of scams are very real for consumers. This is the same investment education and risk barriers that every investment faces and low adoption is hardly surprising with something as new as cryptocurrency.
Finally, developers in the industry need to simplify and secure their product and services. To reach the mass market, investment products and cryptocurrency services need to be simpler to use, yet more secure and accessible.
It’s early days, and it’s still overwhelming to the mass market. The early adopters have entered the market and the predictable shakeout and consolidation will need to take place before stronger companies, simpler products and more accessible services emerge ready for the mass market.
When you build it more simply, they will come.
Author: Jeff Domansky, Managing Editor