🌎 40% of American Adults Now Own Cryptocurrencies in 2023

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In June, new data revealed that 40% of American adults now own cryptocurrencies, a significant increase from last year. The rise in crypto ownership among women and the growing interest from non-owners suggest a sustainable trend, especially following the approval of a US Bitcoin exchange-traded fund.

However, it’s important to note that this data is based on two relatively small surveys (1,001 and 504 people, respectively) and may not fully represent the entire US population. The Federal Reserve reported only 7% of US adults as crypto investors in 2023, using a larger sample size. Yet, both data sets might have limitations due to their methodologies.

Imagine if 40% of the world’s adult population (about 5.75 billion people) owned crypto, not just in the US. This scenario brings up several potential changes:

Individual Economics

Cryptocurrencies offer financial services to the unbanked or underbanked. For example, in the Philippines, 66% of the population is unbanked, but over 13% own crypto. The government is also pushing to release a central bank digital currency to meet rising demand. Over $33 billion in cash remittance is sent home by overseas Filipino workers, showcasing another use case for crypto. Traditional banking systems face competition from blockchain-based financial services as adoption grows.

Volatility and Risk

Cryptocurrencies are known for their volatility, which poses risks for the underbanked. However, if 40% of the world were invested in crypto, this volatility would likely decrease. Increased market participation would enhance liquidity, making it harder for single transactions to dramatically affect prices. As adoption rates rise, cryptocurrencies could stabilize, making their value more predictable over time.

Investment Patterns

With nearly half the adult population holding crypto, traditional investment paradigms would shift. Personal savings could be directed toward digital assets rather than conventional investments like stocks or mutual funds. Diversification would include a mix of equities, bonds, and digital assets.

Financial Systems

The shift in investment patterns would disrupt traditional financial markets. A considerable portion of capital might flow into the crypto ecosystem instead of traditional stocks and bonds. This could result in liquidity challenges and increased volatility in conventional markets. IPOs might be structured differently, with some companies offering ICOs in support of their public offerings.

Crypto Integration

The increased demand for crypto-based investment opportunities would lead to greater integration with existing financial structures. Bitcoin ETFs already provide a regulated pathway for traditional investors to gain crypto exposure. As mainstream adoption rises, these financial products would become commonplace.

Regulation and Policy Changes

Regulatory adjustments are necessary for mainstream adoption. Notable developments include efforts to push crypto regulation through legislative bodies. Legislation ensuring investor protection, curbing market manipulation, and fostering innovation would likely emerge worldwide. Policymakers would need to work with the private sector to develop frameworks that support crypto while ensuring financial stability.

Digital Payment Expansion

Legislation addressing digital payment options is crucial. For instance, a bipartisan bill was introduced to remove the capital gains tax on small crypto payments. If successful, this type of legislation could set a precedent, encouraging more countries to integrate crypto into their everyday economies. Imagine paying for your morning coffee or splitting a dinner bill without worrying about tax implications.

Technological and Social Patterns

As crypto usage increases, blockchain innovation follows, creating new use cases in areas like supply chain management and healthcare. Distributed ledgers can enhance transparency, security, and traceability.

Digital Identification and Trust

Governments are exploring digital identification, with blockchain technology being a natural fit. Blockchain-based citizen authentication can reduce fraud, streamline transactions, and enable secure access. Digital IDs on the blockchain would be universally recognized and securely stored.

Social Implications

For crypto adoption to reach 40% or more, trust in the technology itself is essential. Peer-to-peer transactions could become the norm, reducing reliance on traditional banking. The younger, tech-savvy generation would drive this transition. However, it could also exacerbate digital divides, marginalizing those without internet access or technological literacy. Policy and educational programs would be necessary to promote inclusive access to new financial systems.

Environmental Policy

The environmental impact of crypto is a pressing issue. Major tokens like Bitcoin operate on a proof-of-work model, requiring extensive computational resources and energy. However, crypto and blockchain tech also offer promising avenues for advancing green energy initiatives. Peer-to-peer energy trading could reduce reliance on traditional energy sources.

There’s still a lot of change ahead for widespread cryptocurrency adoption. Thoughtful, well-rounded policies that support innovative technology are essential. Public pressure and recent developments in the US, EU, and UK may push lawmakers to create robust, supportive crypto frameworks instead of imposing endless restrictions.