In a new study that sheds light on the often-misunderstood world of cryptocurrency ownership in the United States, researchers have unveiled a complex portrait that challenges the stereotypes surrounding the typical “crypto bro.” The research provides evidence that cryptocurrency owners are not just a homogenous group of young, tech-savvy males, but a diverse cohort that spans various demographics and political orientations.
The study also discovered that economic factors such as inflation play a significant role in an individual’s decision to invest in cryptocurrencies like Bitcoin, suggesting that for many, these digital assets are seen as a hedge against economic instability. The findings have been published in American Politics Research.
Unpacking Cryptocurrency
Cryptocurrency, a term that conjures images of digital gold for some and speculative bubbles for others, has been the subject of heated discussions and debates across financial and technological circles. Essentially, cryptocurrencies are digital or virtual currencies secured by cryptography, making them nearly impossible to counterfeit.
The allure of cryptocurrencies, such as Bitcoin, lies in their decentralized nature, free from the control of governments and central banks. This feature, in particular, has attracted a wide array of individuals, from those seeking to invest in the new “digital gold” to others looking for alternative means to protect their wealth from inflation and economic downturns.
The Motivation Behind the Study
Researchers embarked on this study to shed light on the demographics, personality traits, and political attitudes of American cryptocurrency owners. Despite the high volume of discourse around cryptocurrencies, there has been a noticeable lack of empirical data on who the American cryptocurrency owners really are, their motivations, and how their political and economic views might influence their investment choices.
“I started paying attention to Bitcoin and cryptocurrency in 2018, after a friend recommended that I read Saifedean Ammous’ book ‘The Bitcoin Standard,'” explained lead author Grant Ferguson, a senior instructor and director of Outreach and Public Service Internships at Texas Christian University. “At the time, I didn’t realize that there was a strong worldview behind the creation and initial adoption of cryptocurrency and Bitcoin in particular, and it has psychological, economic, and political aspects.”
“As I observed more and more people around the world adopting cryptocurrency as a medium of exchange and a store of value over the last several years, I realized that social scientists didn’t have a good understanding of who these people were or why they were buying cryptocurrency, and we need to know to have a better understanding of its implications for society and government.
“Two moments had a very strong impact on me. I remember sitting in Miami airport at an Irish bar in 2021, and several different people around me were all talking about cryptocurrency. That got me thinking about how popular cryptocurrency was becoming. Later that year, when the President of El Salvador, Nayib Bukele, made his country the first to adopt Bitcoin as an official national currency, I realized that cryptocurrency was having big effects all over the world.”
The Methodology: How the Study Was Conducted
To demystify the profile of American cryptocurrency owners, the researchers employed a robust methodology, conducting a comprehensive survey in May 2022 with YouGov. The timing was particularly relevant, given the prevailing high inflation rate of 8.6%, a 40-year peak, and a significant fluctuation in Bitcoin’s value. These conditions provided a unique backdrop to understand the motivations behind cryptocurrency investments beyond speculative interests.
The survey queried 2,500 American adults on a range of topics, including demographics, personality traits, political attitudes, and perceptions about national conditions. By leveraging a nationally representative sample, the study aimed to offer a more accurate and inclusive understanding of the American cryptocurrency investor, moving beyond anecdotal evidence and small-scale studies that previously dominated the conversation.
Demographics of Cryptocurrency Owners
Contrary to the popular belief that the typical cryptocurrency owner is a young, white male, the study found that the reality is far more diverse. Approximately 14% of the surveyed sample owned cryptocurrency with an average age of 41.81 years. Cryptocurrency owners were predominantly male (64.78%), yet the study revealed significant diversity in terms of ethnicity. Cryptocurrency owners were less likely to be white and more likely to be Asian or Hispanic, indicating a wider demographic interest in digital currencies than previously thought.
“There is a lot more demographic diversity among cryptocurrency owners than the public probably expects,” said co-author Kathryn Haglin, an assistant professor at the University of Minnesota-Duluth.
Additionally, the majority of cryptocurrency owners (77.13%) also owned traditional stocks, suggesting that they are generally inclined towards investment and hold other liquid assets. This finding challenges the notion that cryptocurrency is the sole domain of speculative investors or those distrustful of traditional financial markets.
Education also played a role, with a higher percentage of cryptocurrency owners holding college degrees or postgraduate degrees compared to the sample average.
Personality Traits of Cryptocurrency Owners
Cryptocurrency owners displayed significantly higher levels of Openness to Experience, aligning with the trait’s association with a tolerance for risk and a propensity for engaging in new ventures, such as the volatile cryptocurrency market. Conversely, they were lower in Conscientiousness, suggesting a less cautious and more impulsive approach that might be attracted to the high-risk, high-reward nature of cryptocurrency investments.
“The personality effects here are consequential,” explained Soren Jordan, an associate professor at Auburn University and co-author of “Party Polarization in America: The War Over Two Social Contracts.”
“At a time where only 13% of the population owned cryptocurrency, on average, moving from the population-average level of openness to experience to the measured maximum increases your probability of owning cryptocurrency by 5%, all else constant. The effect is of similar size for conscientiousness, but in the opposite direction.”
Cryptocurrency owners were also found to be less Agreeable, indicating a more skeptical or questioning attitude towards traditional financial systems and possibly a greater willingness to explore alternative investment avenues. However, lower Agreeableness was not a significant predictor of cryptocurrency ownership once other factors were accounted for.
Interestingly, the study found cryptocurrency owners to exhibit higher levels in all three Dark Triad personality traits (narcissism, Machiavellianism, and psychopathy) compared to the average American. But these traits did not predict cryptocurrency ownership when controlling for other factors.
“Some media portray cryptocurrency owners pathologically,” Ferguson said. “They suggest that investors who buy cryptocurrency are irrational, with the psychopathic, narcissistic, manipulative tendencies of an exaggerated version of a high-Dark-Triad personality. Our study shows that’s not accurate. The Dark Triad personality traits only have a modest relationship, at best, with influencing investment in cryptocurrency.”
Political Attitudes and Economic Factors
The researchers also explored how political attitudes and perceptions about national conditions influence cryptocurrency ownership. Owners were found to be more in favor of reducing government spending than the average American, suggesting a libertarian slant. They also had a marginally higher likelihood of harboring conspiratorial thoughts. However, trust in the government among cryptocurrency owners was not significantly different from the average, challenging the assumption that distrust in government is a primary motivator for cryptocurrency investment.
“I was surprised to find that cryptocurrency owners are not less trusting in government than the average American. They are a little more skeptical of how transparent and democratic our government is, but no more or less trusting than anyone else,” Ferguson told PsyPost.
Economic factors, particularly inflation, played a significant role in the decision to invest in cryptocurrencies. The study’s timing during a period of high inflation offered unique insights into how economic conditions influence investment behavior. There was a significant relationship between personal experiences of financial hardship due to inflation and the likelihood of owning cryptocurrency. This suggests that for some Americans, cryptocurrencies represent a hedge against economic instability.
“Cryptocurrency owners appear to respond rationally to financial pain due to inflation by putting some of their wealth in an asset class that may be more resistant to inflation,” Ferguson said. “They are concerned about too much government spending, perhaps due to how it can cause inflation. These views are predicted by the philosophy behind the creation and adoption of Bitcoin.”
“There’s one truism of American politics that my own previous work speaks to a lot: party identification polarizes everything in modern politics,” Jordan added. “So I’m particularly interested when we do not observe partisan or ideological effects. We didn’t here: the drivers of cryptocurrency ownership are not tethered in any real sense to political identifications (partisanship, ideology) or political preferences (for government spending or even trust in government). Something more fundamental is happening.”
The findings paint a detailed and multifaceted picture of American cryptocurrency owners, moving beyond stereotypes to reveal a diverse group of individuals united by an interest in digital currencies.
“Cryptocurrency owners are much more heterogeneous of a group than we realize,” Jordan said. “Sure, they’re typically younger and male. But they claim no particular political affiliation, no ‘liberal’ or ‘conservative’ preferences, they cut across racial identifications, and they’re not specifically distrustful of government. The ties that bind are personality: they are more open to new experience and less conscientious. Thinking as a politician or other decisionmaker targeting these groups, that’s a pretty diverse coalition with a lot of opportunity.”
Limitations and Future Directions
While the study offers valuable insights into the demographics, personalities, and motivations of American cryptocurrency owners, it is not without its limitations. The researchers acknowledge that the dynamic and rapidly evolving nature of the cryptocurrency market, along with the diversity of the American populace, means that these findings represent a snapshot in time.
“This is only one sample at one point in time,” Haglin noted. “These findings will almost certainly evolve and shift as cryptocurrency evolves and shifts as an asset class. Follow up surveys in future years will be necessary to stay current on what these personality and demographic changes look like.”
“The growing number of bills about cryptocurrency that have been introduced in Congress is a sign of how important this asset class is,” Ferguson added. “Several state legislatures have passed laws related to cryptocurrency. The city where I live, Fort Worth, Texas, was the first city in America to mine Bitcoin.”
“Texas Christian University (TCU), where I work, has a fintech certification program designed to teach students about financial technologies like cryptocurrency and artificial intelligence. As politicians, businesses, and people all over the world consider cryptocurrency, they will want to know the personality, politics, and demographic profile of cryptocurrency investors. I hope our research helps them do so!”
The study, “The Personality and Politics of Cryptocurrency Investors,” was published published online on December 11, 2023.
