Who Uses Bitcoin? The Answer May Surprise You

By Hal M. Bundrick Sep 26, 2014 7:50 AM EST

bitcoin users

NEW YORK (InsideBitcoins) — Who uses Bitcoin? Gen Y techno-geeks? Drug users and political separatists? You may be surprised to find out that early-adopters of the cryptocurrency don’t always fit the popular media-fashioned mold.

And yet, sometimes they do.

Two researchers at the University of Illinois Urbana-Champaign recently compiled data that was collected in January of this year – prior to the collapse of Mt. Gox.  Jeremiah Bohr, visiting assistant professor of sociology and Masooda Bashir, assistant professor of library and information science, analyzed nearly 1,200 responses from the survey, which was posted on popular bitcoin websites, including Bitcoin.org, Reddit and Twitter. The researchers admit the sample is not perfect.

“Surveying a random sample of the Bitcoin community is nearly impossible as Bitcoin offers a lot of privacy to its user, the currency is not regulated by any centralized agency, and adoption of Bitcoin is still not widespread,” they caution.

The average respondent age was about 33 years old, and nearly half indicated that they lived in the United States.

Follow the money

While bitcoin enthusiasts are typically portrayed as young tech innovators, the research indicates otherwise.

“In terms of age, the accumulation of bitcoin wealth conforms to patterns we expect to find in terms of traditional currency wealth, where wealth increases with age and plateaus in the mid-to upper-50s,” Bohr and Bashir note. “25-year-olds have about half as many bitcoins as 35-year-olds, who themselves have about half as many bitcoins as 45-year-olds (after which point the marginal effects of age on bitcoin accumulation slow down and then decline around age 60).”

But how you spend the digital currency apparently does provide a clue to your enthusiasm for the nearly-anonymous digital currency.

“The marginal effect of spending bitcoins on illicit goods (narcotics, gambling services, or other illegal goods) predicted that those users had about 25% – 45% more bitcoins (within the 95% Confidence Interval) than those who had not spent bitcoins on illicit goods,” the researchers say.

Putting your money where your mouth is

And enthusiasm combined with community engagement is another clue.

“Engagement with Bitcoin-specific platforms to discuss Bitcoin was another positive predictor of Bitcoin accumulation, as talking about Bitcoin online was correlated with owning about twice as many bitcoins as those who do not engage discussion on Bitcoin-specific platforms.”

Unsurprisingly, survey respondents who said they were “investors” in bitcoin held about four times as many bitcoins as those who did not self-identify as investors.

Predicting the price of bitcoin

Bitcoin believers aged 35-40 are most bullish on the long-term value of the cryptocurrency. Users around the age of 60 predict that the long-term value of Bitcoin will be about half the level predicted by 35-40 year olds, according to the study.

And Bohr and Bashir  note another statistical wrinkle that defies an easy explanation:

“Interestingly, miners — who contribute to building the infrastructure of Bitcoin — are more pessimistic than non-miners regarding the long-term value of Bitcoin.”

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