Bitcoin for the Average Joe: Breaking the tech barrier

16 May, 2018

It's easy to forget from our comfortable technological bubble that cryptocurrency is still viewed as magic internet money by some folks. In fact, it probably carries that connotation among most folks.

These folks aren't technologically illiterate, by any means. About 95 percent of the population now owns a cellular phone, and 77 percent own a smartphone.1 They deposit money in automated teller machines and check their bank accounts online. Some might even consider themselves audiophiles, shelling out big bucks for the newest speaker equipment.

By comparison, just under 8 percent of the U.S. population owns some form of cryptocurrency, including granddaddy bitcoin.2 Just to pick a wild comparison, about 8 percent of the U.S. population - 26 million people - lives in Texas.3

That leaves an awful lot of room for growth. So, what's stopping the Average Joe from making bitcoin a part of their investment portfolio - or even a part of their day-to-day spending?

Who owns bitcoin?

Regarding bitcoin specifically, about 60 percent of the U.S. population has heard of it and about 5 percent of the U.S. population owns at least a couple Satoshis.

Among those owners, 71 percent are male, 58 percent are between the ages of 18 and 34, and fully half of them identify as minorities.

Further breaking down the numbers, a third of bitcoin owners said they believed bitcoin to be a workaround for onerous government regulations, and 24 percent said they trusted bitcoin more than the U.S. government itself. A similar number viewed their bitcoin investment as part of a doomsday kit, a sort of digital prepper stash in case traditional investments implode. Another 60 percent were counting on their bitcoin to grow in value, so they weren't keen to spend it. It was strictly an investment tool.

So, the picture of the average bitcoin owner is a young, minority male with investment interests and a keen distrust of the current governmental and financial systems.4

If you took this hypothetical bitcoin owner and transplanted him into another place and time, you might find him swaying in the mud at Woodstock. More to the point, this isn't a wholly inaccurate picture of early Silicon Valley. Young, rebellious, willing to try something new - that's the typical bitcoin owner.

Why, then, is it so hard to convince these former radicals to adopt cryptocurrency?

Why don't more people own bitcoin?

It's become a cliche that old folks and technology don't mix. It's an overused trope in movies, sitcoms, and the like: Clueless Grandma or Grandpa is stymied by some newfangled piece of technology.

That trope is a little dated now. Even our oldest old folks have been exposed to computers in some form or another for at least the past 30 years. Many of the same people who shy away from bitcoin have no problem with the idea of signing in to check their email or paying a bill via a website.

It doesn't help that the older generation's perceived financial leaders have come out against bitcoin.5 In 2017, JP Morgan Chase CEO Jamie Dimon slammed bitcoin at an investors conference.

He's since retracted most of his statements, but the damage had already been done.6 Here was a respected - and elder - member of the financial community comparing bitcoin to early modern Holland's tulip craze. He said he'd fire any of his employees caught trading bitcoin, because that kind of behavior was "stupid" and "dangerous." He even launched the dreaded B-word - bubble.

That's really all it took to scare most folks off of the fence and into the welcoming arms of their traditional financial institutions. That really might have been the point all along. Banks have repeatedly and vehemently launched attacks against bitcoin and other cryptocurrencies, in part because they threaten the banking business model. In fact, bitcoin creator Satoshi Nakamoto specifically singled out trusted third parties - banks being the most visible - in his 2008 white paper outlining the purpose and function of bitcoin.7

If you had a successful business and a new guy set up shop across the street promising bigger returns and no middleman hassle - wouldn't you say nasty things in self-defense, as well?

Leaving Dimon by the wayside for a second, because he ultimately did partially retract his statements, bitcoin and other cryptocurrencies haven't done themselves any favors from a security standpoint. For one thing, they are immensely volatile. If you're hoping to plant a $10 seed and wind up a millionaire, that's a great thing. If the market goes south, you're out pizza money for Friday. But if you're thinking about sinking your hard-earned 401K into bitcoin, and your options are becoming wildly rich or absolutely destitute - the choice is fairly clear. Play it safe, play it conservative, and keep your money and your nice, small, predictable gains.8

True security has been a problem, as well. Due to their digital and anonymous nature, cryptocurrencies are a target for hackers. The 2014 Mt. Gox episode cost the exchange its livelihood and about $460 million in purloined bitcoins. Headlines like that make people nervous and far less likely to participate in the market. Never mind all the funds that have gone missing from regular old retailers and banks - those fall by the wayside and the police are assumed to be hot on the trail of the thieves. bitcoin comes off as a bit shadier. It's not entirely clear who stole the money, where it went, or even what the money was in the first place. The idea of translating cold, hard dollars into 1s and 0s that can be filched through a computer screen is not appealing to many older investors.

Is any progress being made?

Luckily, the growing maturity of the bitcoin market is solving some of these problems naturally. Volatility, a surefire big investment killer, is slowing.9 This true of cryptocurrency in general and bitcoin in particular. It's been around for some time now, and it's gotten more than a second glance from institutional investors and the U.S. government. bitcoin has hacked a degree of respectability for itself from the financial sector, and it likely won't be long before a derivatives market emerges. That kind of paper market will give big and little investors alike a buffer from the raw market and a familiar face to deal with. Security is also steadily improving. Systems incorporating two-factor authorization are becoming the norm, and they are no more onerous than a password or PIN.

Finally, the culture surrounding bitcoin is changing, ever so slightly. What was once thought of as a fringe computer nerd thing has entered the mainstream via the headlines of the Wall Street Journal and the New York Times. If you doubt cryptocurrency's growing mainstream acceptance, take a look at how the U.S. Securities and Exchange Commission and the U.S. Internal Revenue Source view it. The commission is trying to decide if cryptos can be considered securities for initial coin offering purposes, and the IRS would just be happy to collect taxes from traded or sold crypto.10

It might not be the kind of respectability Nakamoto had in mind, but it's liable to bring Average Joe investors in out of the cold.


1) Mobile Fact Sheet, Pew Research Institute

2) "Survey Says 8% of the American Population Now Own Cryptocurrency." bitcoin News. 21 Mar, 2018.

3) "US States: Population and Ranking." Argentina's Flag -

4) A Look at Who Owns bitcoin (Young Men), and Why (Lack of Trust). Bloomberg.

5) "Bitcoin Skeptics Just Too Old to Get Digital World, Says Hedge Fund Mogul Novogratz." bitcoin News. 27 Nov, 2017.

6) Surane, Jennifer. "Dimon Says He Regrets Calling bitcoin a 'Fraud'." Bloomberg. 9 Jan, 2018.

7) "Bitcoin: A Peer-to-Peer Electronic Cash System." bitcoin - Open Source P2P Money.

8) Adkisson, Jay. "Why bitcoin Is So Volatile." Forbes. 10 Feb, 2018.

9) Huillet, Marie. "2018 'Mature' Crypto Market Will Draw More Investment, See Less Volatility, Analyst Says." Cointelegraph. 6 May, 2018.

10) Zuckerman, Molly Jane. "IRS Warns Taxpayers To Include Crypto On Income Tax Returns." Cointelegraph. 6 May, 2018.