While the use of cryptocurrencies seems to be taking the world by storm, Paysafe’s new ‘Inside the crypto community’ report has taken a step back to analyse who exactly are the people behind owning crypto.
In light of this, Paysafe’s CEO of Digital Wallets, Chirag Patel explores the four personalities behind each crypto owner, as well as their habits and their motivations for acquiring crypto.
The landscape of crypto investors is more diverse than ever, from professional day traders to those just seeking thrills. To learn more we commissioned a survey of 2,000 crypto owners in the US and UK to find out about who is acquiring crypto and why for our report Inside the crypto community: Plotting the route to mass adoption. A clear pattern emerged from the data; there are four types of crypto owners, each with their own habits and motivations for investing in crypto:
The day traders
These crypto owners are more clinical in their approach to acquiring and trading cryptocurrencies, as well as, significantly more confident in their trading abilities than other investor types.
These traders are of course very active; 20 per cent of the crypto community is acquiring or investing in crypto daily. And for 12 per cent of the community crypto is not only about how frequently they trade, acquiring crypto is also their primary source of income/full-time job. And that is why it is only a lack of resources that is holding them back from investing even more into crypto; overall, for 29 per cent of the community having more capital to invest is the factor that would convince them to own more crypto.
Typically, the professional day traders don’t have any doubts about owning crypto or their abilities as investors; of those that say they have never had doubts about crypto one third (33 per cent) say the reason for this is that they trust that they know what they are doing and therefore have no reason to have doubts. To attract this type of investor, crypto trading platforms should look to ensure they offer a wide range of cryptocurrencies to support a day trader’s diverse portfolio, whilst also creating a brand and experience that feels smart and innovative appealing to this group’s desire to feel ahead of the curve.
At the opposite end of the spectrum is the thrill-seekers, who account for 21 per cent of traders. For these traders, investing in crypto is all about the fun of investing and the kicks they may get from seeing their investments turn a profit. And like a true gambler, they don’t need to know much about what they are taking a punt on to experience the thrills. In fact, a quarter of all crypto owners describe both their knowledge of cryptocurrencies (26 per cent) and their confidence in their trading abilities (25 per cent) as low. When considering how best to cater to the thrill seekers, trading platforms should consider how they create a seamless user experience for users with less crypto knowledge. For example, creating an easy-to-use platform which allows users to take advantage of smart features such as market sentiment analysis, currency value change alerts, automated ordering and all importantly for the thrill-seekers, access to their potential profits with a quick and easy withdrawal function.
Much less active than day traders or thrill-seekers are those who are investing for financial gains but are much more passive in the way they manage their investments. These crypto investors are known in the community as HODLers (an anagram of HOLDers i.e., investors that keep hold of their crypto) and are part of the 44 per cent of crypto owners that are buying or investing in crypto once a month or even less frequently.
For HODLers (20 per cent of all traders) crypto demonstrating long-term gains and steadily rising in value is the thing that would convince them to invest more of their assets into crypto. And despite being passive investors that won’t stop them cashing out their crypto if there is more money to be made elsewhere; overall 21 per cent of traders that say they have had doubts about owing crypto have sold some of their crypto assets due to it falling in value.
Although trading platforms can’t control the value of crypto assets, they can give peace of mind in terms of creating a safe environment for trading. As HODLers are less likely to frequently check their crypto portfolio it is important they invest through a trustworthy platform. This type of trader would typically look for a regulated trading platform which can reduce the risk of losing funds to criminals and be a safer option for less active investors.
The tech evangelists
But, most interestingly, it isn’t those that are searching for financial gains or entertainment that make up the largest percentage of the crypto community. When asked about their primary motivation for trading 25 per cent of crypto owners point to their belief that crypto is the future of money as the main reason. For this type of investor, trading platforms must consider how to make buying, selling and spending crypto easy for users, supporting the adoption of crypto as a mainstream form of finance. There is also the opportunity to develop investors’ confidence with crypto through simplifying the crypto trading offering and championing widespread adoption.
It is not just these tech evangelists that believe in the transformative qualities of crypto. Overall, 54 per cent of the community are already convinced that cryptocurrencies are the future of finance (vs. just 19 per cent that do not) and half (49 per cent) even believe that everyone will own cryptocurrencies in five years’ time.
For the true believers in the power of crypto, the time is now. In fact, 21 per cent of those that want to switch all their finances to cryptocurrencies want to do so because they want to make all their payments using crypto and see a use beyond investor trading.
Figures from triple A show that currently there are over 300 million crypto users across the globe, with more than half of users based in Asia. Unsurprisingly, Europe (38 million users) and the US (27 million users), who have one of the largest populations of crypto owners by country in the world, account for a significant percentage, particularly of mainstream trading platform users. But perhaps more interesting is how the number of crypto owners looks set to continue to grow in the coming years with exciting opportunities in South America and Africa, which currently have 24 million and 34 million crypto users respectively. In these countries, crypto owners are looking beyond financial trading to crypto’s wider applications in commercial trading and as a viable alternative to traditional currencies, showing the potential future of crypto as a mainstream form of finance.