Cryptocurrency: Americans Owning Crypto Doubles

Bitcoin was launched in 2009. We are now rounding out the tenth year of its existence. Since then, there have been hundreds of new coins introduced to the market. More recently Facebook—with over a 2 billion users worldwide—announced the introduction of the Libra to be released in 2020. Moreover, World banks are encouraged by the International Monetary Fund to create their own cryptocurrency.

Today, we see crypto names like Ethereum, Ripple, Litecoin, Tezoz, Binance, and many more. According to Coinbase in 2019—crypto “continued to grow by awareness and enthusiasm in the U.S.”  More and more people are getting to know Bitcoin. It’s no longer a conversation just among geeks. With President Trump’s tweet, and the announcement of Libra—awareness of crypto has moved beyond only “hearing” about Bitcoin.

Finder Reports on America

Indeed, according to Helen Partz (Cointelegraph)  the number of Americans owning crypto nearly doubled in 2019: from 7.95% in 2018, to 14.4% by October 2019.

Partz, citing a study by Finder, says that Americans hold an average of $5,447. However—because about 75% of the respondents hold less than this amount, the median amount of cryptocurrency owned is closer to $360. While over half of the survey respondents hold Bitcoin, they also hold other forms of cryptocurrency.

Image Source: yahoo.com

 

Why Own Crypto?

There are many who remain skeptical about Bitcoin and cryptocurrency. Many who believe cryptocurrency has no real value, or believe it is a high-tech Ponzi scheme. Others hold a wait and see attitude. Despite these views, according to Yahoo!Finance the total value of the top 10 cryptocurrencies is $194 Billion.

So why would one own cryptocurrency? Hackernoon gives us three principals to consider: Utility, scarcity, and demand.

Utility. You might hear some critics say that crypto has no fundamental value or real utility. It’s just a Ponzi scheme. However, these “views are just not actually true,” say the authors of Hackernoon. Bitcoin has immense utility as a censorship-resistant store of value. “No bank, government, and company can control your wealth and how to transact with it.”

Scarcity. A basic law of economics that one learns in an introductory Economics course—is the law of scarcity. The law of scarcity simply notes that economic resources are limited, they are not infinite. As a consequence, the second law of economics kicks in: the law of supply and demand. Because a desired commodity is scarce, price is determined by the ratio of demand relative to the supply. The more demand for a limited supply, scarcity, the higher the price will be.

With Bitcoin, says Hackernoon, supply is limited unlike fiat currency. Bitcoin has a 21 million bitcoin hard cap. Thus—unlike fiat currency, Bitcoin is deflationary because there will never be more than 21 million bitcoins—ever. The code has a built in limited supply, creating scarcity.

Demand. Bitcoin was once valued at $20,000. Today it is priced at $7,050. This fluctuation, in part, is a reflection of demand. And this will be true for all other cryptocurrencies. What will generate a higher demand? A close analogy is gold. When the economy or world stability is shaken, the demand for gold increases.

Fiat currency is the most accepted form of payment. All fiat currency is backed by the country of its origin. The stronger a country’s economy, military, and political system is—the strong the currency will be. Demand for cryptocurrency can be affected by uncertainty in the economy. With the threat of a financial crises, as in 2008, more people will look for a safe haven to put their money. Gold has been a traditional safe haven. Now, with cryptocurrency, more people will look at crypto as a safe haven.

Many involved in crypto today do so because it is an alternative to the stock market and other traditional forms of investments. According to Finder, writes Partz, the “majority of Americans are owning some form of cryptocurrency because they consider it a type of investment.” However, just over a quarter, 25.6%, of Americans hold crypto as a way to “store their money outside traditional financial institutions.”

 

Who’s Buying Crypto in America?

Coinbase  illuminates the landscape on which U.S. states are buying crypto.

 

Image Source: coinbase.com

California, New York and Washington have the biggest per capita holding in crypto. Delaware, Nevada, and Wyoming, adjusted for population, are states with the highest per-capita ownership of crypto. These are states with a “lower overall percentage of crypto holders, but a higher per-capita ownership,” that is, states with fewer people who each have a larger than average amount cryptocurrency.

 

Conclusion

While the number of crypto owners has doubled since last year, it is still lagging behind other countries. Many Americans are still skeptical about cryptocurrency, thinking that crypto is a bubble. While others are finding it difficult to use it, or understand it, says Carl Bird, writing for BeInCrypto.

As in any investment, one should study the markets. For Bitcoin and crypto, one must move beyond the hype and animal spirits of investing.

 


DISCLAIMER:   This article is for informational purposes only, and it is not intended to give advice on any cryptocurrency, or any investment strategy. For investment advice, see your accountant or licensed professional.

 

 

Samuel H. is an author, writer and speaker with over twenty years in the educational technology sector.

Contact Samuel

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