Who's Investing In Bitcoin? A Look At Ownership Statistics

Bitcoin and other cryptocurrencies have become increasingly popular in recent years, with hundreds of millions of people worldwide investing in digital currencies. However, despite the hype, relatively few people invest in Bitcoin and other cryptocurrencies compared to more traditional investments such as the stock market. In the US, for example, only around 8% of the population invests in any form of cryptocurrency, with around 5% investing in Bitcoin. While crypto is particularly popular among younger, male investors, it is still a fringe investment compared to other, more established routes.

Bitcoin investors by age and gender

A similar gender gap was observed in Spain, where a study found that females had much lower acceptance and usage rates of cryptocurrencies than men. The study identified several barriers that limit the acceptance and use of cryptocurrencies by women, including a lack of investment experience in traditional assets, a general lack of knowledge about cryptocurrencies, and the fact that cryptocurrencies do not inspire a sense of security in women.

In terms of age, a survey by Bohr showed that the average age of Bitcoin users was 33 years, while another survey in 2016 found the average age to be 38 years. The distribution of Bitcoin users tends to be concentrated between the ages of 20 and 44, with a more pronounced skew towards the late 20s and early 30s.

In the US, younger adults are more likely to own cryptocurrencies than older adults, with 15% of 18-34-year-olds owning crypto, compared to 11% of 35-64-year-olds and 4% of those 65 and older. Additionally, adults aged 60 and above were found to be significantly less likely to hold cryptocurrencies than younger cohorts.

Why people invest in Bitcoin

Bitcoin is a cryptocurrency that has been adopted by an increasing number of people and businesses worldwide. Its value has been rising, and it has become an attractive investment option for many. Here are some reasons why people invest in Bitcoin:

Potential for Profit

The primary motivation for investing in Bitcoin is the chance to make a substantial profit. The highly volatile nature of Bitcoin allows investors to buy at a lower price and sell at a higher price, potentially turning them into overnight millionaires. Trading sites and their advanced AI systems also play a significant role in maximising profits by helping investors sell their Bitcoins at the highest possible price.

Future Potential

Bitcoin currently has over 5 million users, and this number is growing daily. Its widespread acceptance and integration into society have led experts to believe that Bitcoin will continue to rise in value over time. Some even predict that governments will eventually have to recognise it as an official payment method due to public demand.

Reliability Compared to Other Cryptocurrencies

Bitcoin is considered far more reliable and stable than other cryptocurrencies. Its network and infrastructure are superior, and it places a strong emphasis on protecting its users, making it one of the safest options in the market. Additionally, Bitcoin has proven to be a secure and trustworthy company, giving it an advantage over other cryptocurrencies vying for market dominance.

Decentralised Nature and Limited Supply

Bitcoin is a decentralised currency, meaning no single entity or government owns or controls it. This aspect appeals to those who view it as a subversive concept, allowing investors to see themselves as participating in a counterculture. Additionally, Bitcoin has a limited supply, which can drive up its value as demand increases.

Government Support and Legal Recognition

Although no single government controls Bitcoin, it has gained legal recognition and approval from governments worldwide. This adds to its credibility and reliability as a currency, assuring investors that it is here to stay.

Bitcoin vs other investments

Bitcoin is a very different investment from stocks or other fiat currencies. As a cryptocurrency, it is a digital asset based on blockchain technology, which can circulate without the centralized authority of a bank or government. This means that no centralized authority oversees the transactions on a Bitcoin blockchain.

Bitcoin's value rests mostly on its status as the first cryptocurrency and as an alternative to fiat currency. It is secured by cryptography, with transactions verified by a process known as mining, in which miners compete to verify transactions by solving complex mathematical puzzles using powerful computers. This verification method is known as proof-of-work, or PoW.

On the other hand, stocks are regulated financial products, meaning a governing body verifies their credentials, and their finances are matters of public record. Stocks are also linked to companies and generally rise and fall based on their performance.

While stocks are more stable, Bitcoin has experienced tremendous growth. In May 2016, you could buy one bitcoin for about $500. As of July 2024, a single bitcoin is worth $69,790. That's a growth of 12,662%.

However, Bitcoin's price is extremely volatile. In 2015, Bitcoin's price fluctuated between $200 and $500 per coin. In 2017, the price rose to a high of $19,891 in December, before dropping below $3,500 in December 2018. In 2020 alone, Bitcoin's price bounced between $3,858 and $9,074.

Due to its volatility, Bitcoin is considered a risky investment. David Stein, a former chief investment strategist, said that Bitcoin "is speculative, completely based on supply and demand." He added that it is different from other currencies like the dollar or gold because it is a much smaller market, so it is more subject to big swings.

Kirk Chisholm, a wealth manager and alternative investment specialist, agreed that Bitcoin is a risky investment because it is a relatively new development and isn't yet widely adopted. It could be replaced by other more efficient digital currencies or regulated out of existence.

Despite the risks, Bitcoin has become a highly common investment. Hundreds of millions of people worldwide have some form of crypto holdings, and over half of Gen Z have invested in it. However, a recent poll found that only 8% of Americans invest in any form of cryptocurrency, with 5% investing in Bitcoin.

Overall, while Bitcoin has seen tremendous growth and popularity, it is a risky and volatile investment compared to other investments like stocks.

Bitcoin's popularity

Bitcoin is the most well-known cryptocurrency, with 93% of respondents in a survey saying they have heard of it. However, its popularity as an investment vehicle varies across different demographic groups.

According to a recent poll, only 8% of Americans invest in any form of cryptocurrency, including Bitcoin, Ethereum, and fringe coins like Dogecoin. This equates to around 5% of the US population investing in Bitcoin, which is a relatively small percentage compared to the number of people investing in the stock market (58% as of May 2022).

One reason for Bitcoin's popularity among certain demographics is the exposure to and familiarity with crypto through social media. Younger investors, in particular, are more likely to be exposed to crypto on social media and are often more technologically advanced, making it easier for them to navigate the process of buying virtual coins.

Despite the risks and regulatory concerns associated with cryptocurrencies, Bitcoin remains a highly popular investment, especially during the Covid-19 pandemic when retail trading apps surged. Over half of Gen Z (between the ages of 18 and 25) have invested in crypto, according to a report by the CFA Institute and Financial Industry Regulatory Authority's Investor Education Foundation.

However, it is important to note that Bitcoin's popularity as an investment is not uniform across all countries. According to Henley & Partners' Crypto Wealth Report, Singapore, Switzerland, and the United Arab Emirates are the top three countries for crypto adoption, considering factors such as public adoption, regulatory environment, taxation, infrastructure, innovation, and economic factors. The US and UK ranked 5th and 7th, respectively, with high public adoption and interest but falling behind in the tax-friendly category for crypto investors.

Bitcoin's risks

Bitcoin is considered by many to be the future of monetary exchange. However, despite its popularity, there are some serious risks when it comes to investing in this cryptocurrency. Here are some of the key risks to be aware of:

Volatile and Fluctuating Market

The price of bitcoin is constantly changing, and its market is unpredictable. There is no guarantee of getting a return on your investment, and investors need to be vigilant about monitoring the market to avoid massive losses. Small investments are often recommended as a more beneficial long-term strategy.

Cyberattacks and Fraud

As a technology-based currency, bitcoin is susceptible to cyberattacks and hacking. There is also a fair amount of fraud in the bitcoin market, with fake exchanges duping investors out of their bitcoins. Additionally, if you lose access to your wallet, it can be challenging to retrieve your coins.

Little or No Regulation

Currently, the bitcoin market operates with little to no major regulations. Governments and tax authorities worldwide are still figuring out how to approach cryptocurrency, and the lack of taxation could lead to problems if bitcoin competes with government currency. The future of the bitcoin market is highly uncertain.

Technology Reliance and System Shutdown

Bitcoin is entirely reliant on technology, and without it, cryptocurrency becomes worthless. Bitcoin owners are more vulnerable to cyber threats and online fraud. If the system goes down, there is no physical collateral to fall back on, unlike with traditional investments like gold or real estate.

Block Withholding and Ponzi Schemes

Bitcoin's system of creating new currency through "blocks" can be manipulated by a select few to benefit themselves while leaving others with nothing. Bitcoin has also been referred to as a Ponzi scheme, where people at the top benefit from the ignorance of others. This can create a bubble economy that may burst, leaving many people with worthless cryptocurrency and significant financial losses.

These are some of the critical risks associated with investing in bitcoin. It is essential for potential investors to carefully consider these risks, conduct thorough research, and approach bitcoin and other cryptocurrencies with caution.

Frequently asked questions