Here is a jaw-dropping statistic: Nearly 57 million people are expected to buy cryptocurrency in the next year. That activity is projected, though over 20 percent of Americans have never owned crypto.
At the same time, based on a new study, a big obstacle keeping people from buying cryptocurrency is not understanding it. In fact, nearly one in four Americans do not comprehend cryptocurrency at all.
The Ascent surveyed 2,000 Americans adults in May 2021, asking them on whether they understand blockchain, where they get information about cryptocurrency, and what tools they use to invest in crypto, among the inquiries.
So, what is cryptocurrency? Basically, it is a digital form of currency and an asset class. It can be used to buy goods and services globally. Well-known cryptocurrencies include Bitcoin, Dogecoin and Ether. High-profile investors reportedly includes the likes of Tesla CEO Elon Musk and rapper Snoop Dogg,
In recent days, Dogecoin and Bitcoin suffered drops in value for various reasons, thumping the industry overall. The cryptocurrency market plunged $500 billion in value, falling from more than $2.5 trillion in value to $2.02 trillion, CoinMarketCap.com disclosed.
Matt Frankel, a certified financial planner at The Ascent, told Black Enterprise via email that cryptocurrencies are digital assets that, unlike fiat currencies like the U.S. dollar, are not regulated or issued by any central bank or authority.
Other top findings from The Ascent study include:
- Some 57% of Americans believe that those who have not invested in cryptocurrency can still make a profit.
2. Over 51% of Americans who own cryptocurrency bought it for the first time within the last 12 months.
3. Some 41% of Americans would consider receiving part of their salary in cryptocurrency and another 31% would consider receiving all their salary in cryptocurrency.
4. About two-thirds (65%) of Americans would consider signing up for a credit card that offers rewards and cash back in crypto.
5. Coinbase is the leading exchange: 67% of American adults who own or have owned cryptocurrency have used that exchange. No other exchange was used by more than 28 percent of respondents.
Reflecting on the pros and cons, Frankel says the use cases of cryptocurrencies are both as a method of payment and a store of value. Cryptocurrencies can be used to pay for goods and services at merchants that accept them, and because most — especially Bitcoin — have a finite supply, they are often referred to as “digital gold.” He added that the drawbacks are that cryptocurrencies have not been widely adopted for real-world use, and the prices are extremely unstable.
Along those lines, is now a good time to buy crypto? Frankel claims there is absolutely no way to know what the price of any cryptocurrency will do going forward. Trying to time the price of any asset rarely works out well. “If you feel like cryptocurrency is something you want to dip your toes into, the best way to approach it is to build your position in smaller increments over time, instead of buying all at once.”
He pointed out 20 percent of people who do not own cryptocurrencies are staying on the sidelines because they do not understand how to buy it. However, Frankel says, buying Bitcoin and other cryptocurrencies can be easier than you think.
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“You can buy Bitcoin through platforms like Cash App and Venmo, and if you want different cryptocurrencies, a reputable U.S.-based cryptocurrency exchange like Coinbase or Gemini is a perfectly safe and user-friendly way to buy.”
Other personal finance experts recommend that people do not buy or invest in more crypto than they can bear to lose. They say investors would do well to consider that because the market is volatile and can be unpredictable. They note while cryptocurrency has realized robust gains it also has had big declines.
Observers suggest that prospective buyers do their homework and extensive research to become more aware of the potential risks of crypto before plunging in. The Ascent’s Frankel strongly suggest watching a primer on Bitcoin or cryptocurrency — Cash App has a great one that’s easy to follow — before buying.
Additionally, there are podcasts like this that offer tips on buying and investing in crypto.