Bitcoin is still a very enigmatic phenomenon. People are not even sure what it is; a currency? A store of wealth ala digital gold? There are different niches of the economy that view it totally differently from each other.
However, the real proof in the pudding is what the common man on the Bitcoin Street sees Bitcoin as and how they use and work with the new technology and revolution of money.
A recent survey from LendEDU shows how 1,000 Americans utilize their Bitcoin investment and the opinions they have from holding to spending, tax and security.
“Why did you invest in Bitcoin?”
As Bitcoin gains more and more traction, it is bringing in a larger and more diverse slice of the population. No longer the plaything of the technological savvy, there are mothers and teenagers who are investing.
According to the raw data presented above, the large majority of people are in the Bitcoin game for the long term revolutionary changes it can bring. This is interesting as there is a strong belief that people are getting into Bitcoin for greed; however, research suggests that only 14 percent of people are chasing riches.
Perhaps a deeper dig into the data would suggest that those who see it as world-changing are the same people who are fed up with the way things are now. The traditional money market and exclusive investing ecosystem is being shunned by millennials and the likes.
Roshaan Khan, a 20-year-old senior at Virginia Commonwealth University, seems to one of those who would fall into the 40-odd percent:
“All of my net worth is in cryptocurrencies because I see them as the best way to escalate my ability to be financially secure and pay off my student loans,” Khan said. “I like the idea of decentralization, the fact that there’s a lot less corruption and political ties. That idea appeals to me … Not having to go through banks. Having financial control over our lives again.”
“How much do you own?”
This figure seems surprisingly low. Bitcoin investment that amounts to just under $3,000 does not seem to suggest that the common man is throwing everything they have at the new technology.
There is probably still a bit of a wait and see mentality, a similar mentality that many banks have.
David Gledhill, group chief information officer at DBS, one of Asia's largest banks, has said that there is no reason for his bank to join the Bitcoin craze - yet - as they are happy to wait and see. Perhaps this is a similar approach for many, not to go full tilt into the burgeoning technology.
“Bitcoin isn't going to help DBS bring in customers, deposits or wealth management so right now it's watch and learn," Gledhill explained.
“Hodl or spend?”
The easiest investment advice that is often handed down to newbies in the market is to ‘hodl,’ in other words, accumulate and let it grow.
The survey shows that the ‘Hodl strategy’ is indeed a popular one with more than a two-thirds majority showing strong hands in the face of huge potential profits or even stomach-turning drops.
While ‘Hodling’ is a popular tactic in Bitcoin investing, so much so that Petar Zivkovski, COO of leveraged digital currency platform Whaleclub says: “holding the top 5 cryptocurrencies by market cap as they probably have the best foundation and ability to beat any crash.” The survey suggests some are not in it for the long road.
With Bitcoin jumping from $0 to nearly $8,000 in less than 10 years, it is interesting to note that only 11 percent of people are willing to hold on that length of time to see where things go.
The majority are likely to hold for less than three years. Perhaps this is indicative of the lightning quick market that Bitcoin has built, attracting impatient investors.
Of course, some are waiting for a figure, rather than a time limit, to sell off their digital assets. And just what is that figure? A very precise: $196,165.79.
“Tax and security concerns?”
Tax has been a sticky issue for Bitcoin, especially in the eyes of the IRS, and while this survey suggests that the majority will pay tax on their Bitcoin earning, a large portion wont.
67.38 percent said they will pay tax, while the remaining 35.87 percent will be keeping mum to the tax man.
When it came to security on the decentralized form of money, the concerns were pretty evenly split as 55.85 percent of people said they did not worry about the technological security. The rest, 44.14 percent, did.