With industry conversations around Web3 gaining momentum, 451 Research, part of S&P Global Market Intelligence, took a deep dive into cryptocurrency as part of its VoCUL: Connected Customer, Disruptive Technologies 2022 survey. The overarching takeaway? It’s still early days for consumer cryptocurrency adoption in the US, with uptake varying widely by demographic. Overall, 20% of respondents indicated that they have either bought, traded or received cryptocurrencies. The most robust adoption was seen with Gen Z (33%) and Millennials (35%), trailing off into the single digits for Baby Boomers and The Greatest Generation.
When exploring the specific activities that cryptocurrency participants have engaged in, the message is clear: While most have bought cryptocurrencies (64%), a much smaller percentage are selling them (33%), and an even smaller percentage are using cryptocurrency as a payment method (19%). Essentially, most consumers that are engaging with cryptocurrency are treating it as an asset, much like they would a security (e.g., a stock).
Based on this finding, we’ve concluded that most consumers that have bought cryptocurrency have never moved their coins outside of the exchange where they purchased them (e.g., Coinbase COIN , Binance). This is problematic when considering the widely discussed role for cryptocurrency as a medium of exchange in the Web3 economy. The reasons for this are many, including usability problems associated with cryptocurrency wallets and limited merchant acceptance.
Consistent with our findings that considerably more users have bought cryptocurrency than used it as a payment method, the common theme driving adoption is investment. More than one-third (36%) who trade cryptocurrency do so as a general investment to increase their wealth, 27% do so to diversify their investment portfolio, and 25% use it as a tool for retirement savings. As expected, Gen X cryptocurrency users were more likely to trade cryptocurrency to save for retirement (28%) as compared with Gen Z (18%), who are largely using cryptocurrency to expand their wealth (44%).
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For nonusers, which was 80% of respondents, the three biggest cryptocurrency adoption inhibitors included a lack of understanding of the blockchain (32%), lack of investing in general (30%), and the overall complication of purchasing cryptocurrency (26%). At least two of these factors can be addressed via investments in education and usability by cryptocurrency exchanges and wallet providers. Coinbase’s Coinbase Earn program, for instance, rewards users with free cryptocurrency for taking short educational tutorials and quizzes on various cryptocurrency-related topics.
Indicative of the future growth potential of the market, 1 in 10 nonusers reported that they plan to participate in cryptocurrency trading in the future, just not yet. Much of this latent opportunity exists with Gen Z (20% of Gen Z non-users plan to participate in the future), meaning ongoing efforts by cryptocurrency exchanges to convert younger consumers are likely to be well spent. Adoption inhibitors for Gen Z that outpaced the respondent average included inability to afford, environmental concerns, and lack of support from their bank.
Cryptocurrency has been heralded as the future of money and a replacement for our global financial system. While those remain future possibilities, consumer cryptocurrency adoption today remains modest, and most users are treating it far more like an asset than a method of payment. As with many new technologies, ease-of-use and education issues rank as the top barriers inhibiting more widespread adoption. Enhancing usability of cryptocurrency wallets and exchanges and broadening consumer understanding of how cryptocurrencies work are germane to expanding the market opportunity.