Bitcoin has been at the forefront of several crypto rallies that have taken place over the past few years. The largest cryptocurrency by market volume has emerged as one of the most sought-after assets. The regulation by governments across the world, institutional investments, and financial inclusion are some of the factors that have attracted a wider share of the global population towards bitcoin. From merely $500 in 2014 to over $61,000 in 2021, the price of bitcoin has increased exponentially. The steady increase in price and handsome returns are two key reasons driving the increasing investment in bitcoin. But, there are several other reasons contributing to this rise.
Key Factors Contributing To Bitcoin’s Rise
- A More Equitable Economy: While institutional investments and companies like Microstrategy take credit for the growth of bitcoin, the lower-income population has different reasons for investing in the asset. For people with below-average income, bitcoin is emerging as a way to send remittances and buy goods and services. The frequency of bitcoin use for buying goods and services is lesser among the above-average income population.
- Challenging The Gender Divide: Investment has always been a male-dominated territory traditionally. However, bitcoin seems to create a level playing field. Contrary to the popular belief, the female population in the Asia Pacific and other regions is spearheading crypto adoption. However, it remains male-dominated in the US. According to a survey by Block, 47% of women see the prospect of buying goods and services as a good reason to buy bitcoin, compared with only 34% of men.
- Bitcoin Is Still The Undisputed King: When it comes to awareness about cryptocurrencies, BTC is the first thing people want to learn about. For many, bitcoin is a synonym for cryptocurrencies. In a survey by Block, over 88% of respondents said they knew about Bitcoin. This is twice the number of people aware of Ethereum and its significance.
Source: Block Inc
Education Fuels Optimism And Increasing Participation
Bitcoin has had its own share of setbacks including the blanket ban in China, overnight dumps, and market manipulation. Despite all the setbacks, the world’s largest cryptocurrency continues to gain strength. Proper education is the key factor fueling this strength. Education is what differentiates ‘paperhand’ traders from ‘hodlers’. Contrary to the popular belief, investors in countries like Nigeria, India, Vietnam, and Argentina have the highest rates of optimism globally. On the other hand, lack of proper knowledge is the key reason holding back people from investing. Less than 25% of those with “fair to expert” knowledge of cryptocurrencies are skeptical about the future of bitcoin. Over 8% of respondents with little or no knowledge of cryptocurrencies are likely to invest in Bitcoin.
However, the optimism of skepticism quotient differs from country to country. Here’s a chart to explain the situation better.
Source: Block Inc
Also, the optimism rate is higher among people with higher incomes. The difference between higher-income and lower income-people is 46% vs 37%. Surprisingly, word of mouth is another key factor driving mainstream bitcoin adoption. 73% of those who personally know someone owning bitcoin, say they are likely to invest in the digital asset. Also, 37% of those who don’t personally know any bitcoin-owner, are preparing to invest in it.
Lack Of Proper Knowledge
Lack of proper knowledge is the reason holding back people from investing in bitcoin. Price volatility, uncertainty around regulations, uncertain future outlook, and price volatility are other critical factors. Among those with fair to expert knowledge of cryptocurrencies, price volatility is the key reason fueling skepticism. The following infographic will further explain the reasons fuelling skepticism.
Source: Block Inc
Takeaway
The cryptocurrency market is sitting at a critical juncture with the Terra Luna fiasco adding fuel to fear and skepticism. However, these stats show that people see bitcoin as a tool to mitigate the risks of rising inflation and achieve financial stability. Going forward, influencers, exchanges, educators, and pro-crypto institutions need to focus on educating more and more people. This is the only way to minimize skepticism on a larger scale. The stats also show that investors can differentiate between utility tokens and pump and dump coins. 88% of people are aware of bitcoin, compared to just 31% of people for dogecoin. The substantial gap signifies the interest and priorities of the majority of investors. For crypto to do well, people must have the knowledge to differentiate utility tokens from scam projects. An informed community is the need of the hour and this analysis is a small attempt to contribute to that mission.