Seven percent of US adults used cryptocurrency in 2023, either as an investment tool or for making financial transactions, according to data from the Federal Reserve.
What is cryptocurrency?
Cryptocurrency is a type of digital asset used for electronic transactions. Instead of operating through a centralized bank or backed by a government, cryptocurrency is operated independently. Transactions are publicly logged on a ledger called a "blockchain," making information about cryptocurrency trading available to all currency holders. Because all the transactions are thus communally verifiable, blockchains are uniquely tamper-resistant.
How does cryptocurrency get its value?
The values of cryptocurrencies depend on many factors, including supply and demand. There are a limited number of existing “blocks” — a digital collection of transaction data — on a blockchain, and generating new blocks involves a complex process called “mining.” Mining cryptocurrencies involves using software to solve computational problems in exchange for units of the cryptocurrency. As with stocks, the value of a block fluctuates as people invest in or sell their cryptocurrencies.
What types of cryptocurrencies are there?
There are many different cryptocurrencies, and their popularity varies. Examples include:
- Bitcoin
- Dash
- Ethereum
- Iota
- Litecoin
- Monero
- Neo
- Petro
- Ripple
Why do people use cryptocurrency?
Cryptocurrency is most often used as an investment: in 2023, 7% of all US adults bought or held crypto as an investment, 1% used it to pay for something, and another 1% used it to send money to friends or family.
Among those people, 29% said they used cryptocurrency because it was preferred by the other party in a transaction. Other reasons for trading in crypto included transfer speed (18%), privacy (16%), lower transaction costs (13%), safety (7%), and lack of trust in banks (4%).
Who uses cryptocurrency?
Men are nearly three times more likely to use cryptocurrency: 11% of men used cryptocurrency in 2023 compared to 4% of women.
Usage also varied by income level. People with high incomes (family income of $100,000 or more) and low incomes ($25,000 or less) used cryptocurrencies more often than people in the middle-income brackets. Low-income Americans had the highest share of people using crypto for transactions (4%), while investing with crypto was most common among high-income Americans (8%).
Along racial and ethnic lines, 11% of Asian adults used cryptocurrency, compared to 9% of Hispanic adults, 8% of Black adults, and 6% of white adults.
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Is cryptocurrency use increasing?
According to the Fed, the 7% of US adults who used crypto in 2023 was down from 10% in 2022 and 12% in 2021. Usage is decreasing both as an investment (from 11% to 7%) and as payment (from 2% to 1%).
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