Crypto Awareness And Ownership Continue To Grow
Decades after the launch of Bitcoin, cryptocurrency is maturing from a niche within a niche to a global phenomenon. Following the Great Recession, when millions of people lost their homes, jobs, and savings, an individual or a group of people by the name of Satoshi Nakamoto created Bitcoin to replace fiat currency and put an end to the economic crisis. There are roughly 20,000 cryptocurrencies in existence, though many projects have been abandoned and have low liquidity or insufficient funding, meaning they have minimal or zero benefits to others. Some altcoins, Ethereum included, help create decentralized finance (DeFi) systems.
Bitcoin and Ethereum have maintained their positions as market leaders despite the existence of other rivals, and each asset represents a different kind of innovation, blockchain philosophy, and use case. When there’s a surge in the trading volume of Bitcoin, it can impact the current Ethereum price, and the other way around. Bitcoin will continue to grow but not at the breakneck speed of the earlier years, while the future of Ethereum depends on the technology being used, that is, the progress of smart contracts and decentralized applications (DApps). The future of the crypto industry will be defined by trust, and some regulatory tightening is unavoidable.
Up To 40 Percent Of American Adults Own Crypto
According to a report from Security.org, cryptocurrency ownership is estimated at an average of 40 percent, with over 92 million crypto users. The foundational technology of digital assets like Bitcoin, Ethereum, and so on is blockchain, which guarantees secure, encrypted, and distributed transactions that no single entity can manipulate. Additional features include but aren’t limited to 24/7 availability for payment settlements, transparent transaction data, the absence of intermediary fees, and irreversible transactions. Concerning the demographics and characteristics of crypto users, those who embrace innovation are predominantly male.
More often than not, cryptocurrency is portrayed as the next generation of tech bros, even if many people disagree with this declaration. The lack of diversity generates outcomes that are, at best, biased and, at worst, devastating. Cryptocurrency is a volatile asset class and you must be comfortable with the risk before taking action, so it doesn’t come as a surprise that women are at a disadvantage because they tend to be more risk-averse. Women encompass 30 percent of crypto owners, which means there’s a gender imbalance that must be addressed.
Gen Z (18-26) And Millennials (27-42) Are Likely To Invest In Crypto
Crypto owners aren’t rational investors because their decision is still influenced by other people and they don’t avoid the possibility of other investments. Younger Americans are much more likely to own cryptocurrency to build an emergency fund or save for retirement, though it may be many years in the future. Being financially independent is also a goal for Millennials, who want to balance work and fun instead of settling into a traditional retirement and no longer trust the central banking system after the recession of 2008. The search for an alternative has led to the rise of digital currencies.
Taking a closer look at how Gen Zers and Millennials use online resources to learn about investing and financial topics, it’s clear that YouTube is the go-to place, followed by Instagram, Reddit, TikTok, and Facebook. Other information sources include Internet searches and professional advice. There are several barriers that prevent individuals from investing, such as:
- Not having enough savings
- Struggling to make ends meet
- Not having sufficient knowledge about investing
- Being focused on other expenses
Parents of Gen Zers or Millennials exert influence through their own behavior, not to mention financial discussions with their offspring that demystify money matters and foster responsible behavior.
Bitcoin ETF Approvals Will Positively Impact The Blockchain Industry
The decision to approve spot Bitcoin ETFs marked a pivotal moment for cryptocurrencies by providing standardized access to the asset class as a whole without altering its core proposition. With easier onboarding, spot Bitcoin ETFs enhance accessibility to crypto investments for retail and institutional investors, as there are no barriers to entry, which translates into the fact that everyone can take advantage of Bitcoin’s price movements. Exchange-traded products (ETPs) provide convenient liquidity and transparency, and the good news is the SEC said yes to Ethereum ETFs earlier this year, offering investors more choices.
Ethereum ETFs invest in Ethereum directly, offering those interested exposure to the biggest and most impactful cryptocurrency without the challenges of holding it directly. The ETPs are managed by the world’s largest asset managers and capitalize on multi-year technology integration across business units. Ethereum’s growth can be explained by its active and engaged developer base that leads blockchain innovation, growing from 25 developers (early 2019) to nearly 550 (by 2024). Emerging technology expands blockchain utility across complex use cases in the decentralized peer-to-peer scenario.
Buying And Holding Cryptocurrency Isn’t A Taxable Event
If you exchange cryptocurrency for goods, cash, or other digital assets, it results in taxes paid to the government, so it’s necessary to maintain good records, report cryptocurrency in your tax return, and calculate capital gains tax properly. By contrast, if you’re holding Bitcoin or Ethereum, there’s no immediate gain or loss, meaning it’s not taxed. If you dispose of your digital assets for less than they cost you, you have a capital loss that you can apply against your taxable capital gain for that year.
The Final Note
All in all, cryptocurrency is more likely to be used as an investment by higher-income adults with better financial access and to purchase goods and services by low-income adults, unlikely to be held for long periods. Still, situations overlap, which means people who use cryptocurrency as an investment also use it to transact. Cryptocurrency isn’t just here to stay, it’s the future of money, offering significant benefits over the current financial system by eliminating the high fees and inefficient timelines. The technology behind it, blockchain, has opened the door to innovation and created a more secure way to bank.
Let’s look forward to the future because it’s coming.
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