The cryptocurrency world is vast and complex and it’s only getting more complicated by the day. For first-time crypto investors, plunging into such an intricate, innovative and fast-evolving space can be downright daunting. But what makes crypto investing scary also makes it incredibly appealing. So, despite the risks, investors’ interest in digital assets has been increasing over the past years. The rise of exchange platforms like Binance where people can buy or sell Ethereum and any other coin that’s relevant and valuable stands as proof of crypto’s ever-growing popularity.
However, diving head first without doing a little (or a lot) research first is not exactly a recipe for success. Those who take the time to study the market, understand the technology behind cryptocurrencies, learn the lingo and get familiarized with the ins and outs of the industry stand far better chances to make smart investment decisions and earn a profit than those who choose to skip the research phase. When it comes to investing, the knowledge is power adage should serve as a golden rule. So, if you’re not sure where to start your investigation, here are some of the most important crypto stats and facts you should know about.
A brief history of cryptocurrencies
If you want to gain a better understanding of the cryptocurrency industry and where it might be headed, you need to take a look back at how it all began and developed over time, so it makes perfect sense to start with a quick history lesson. Although digital assets are fairly new compared to traditional assets, a lot of things happened in the short time span since they’ve been around.
Although there were several attempts at creating viable forms of digital currencies prior to Bitcoin, none of them was successful. So, the birth of the cryptocurrency industry coincides with Bitcoin’s birth in 2009, which was inspired by the 2008 financial crisis when the control exercised by central banks and governments and its negative effects were put into question.
Blockchain is the technology that enables the existence of Bitcoin, acting as a type of digital, decentralized public ledger that operates on a peer-to-peer network. The first Bitcoin transaction took place in January 2009 between the network’s founder Satoshi Nakamoto and cryptographer Hal Finney. The second one happened almost a year later when someone paid 10,000 Bitcoins for two pizzas.
In its early days, Bitcoin didn’t attract much attention, being worth only a few cents. However, the concept started to catch on soon, Bitcoin’s price began to grow and other coins entered the market. At its highest point, Bitcoin reached approximately $68,000 and the market now counts more than 21,000 different cryptocurrencies.
2013 marked an important milestone as Bitcoin rose above $1,000, although the price dropped shortly after. In 2015, Ethereum, Bitcoin’s greatest contender was launched, introducing smart contracts onto the scene. In 2017, digital currencies really took off, with Bitcoin and other cryptos reaching skyrocketing values.
However, the euphoria didn’t last long as the bubble burst in 2018 and the market entered a period of steep decline. The cryptos that survived became stronger and in 2021 the total market cap passed $2 Trillion USD. And just when things appeared to go well, a few crypto crashes and scandals marked the onset of the latest crypto winter whose effects still plague the market. All in all, it was a bumpy ride for digital currencies so far, with plenty of ups and downs showcasing their inherent volatility.
As we’ve come to learn from their short history, instability and unpredictability are the common denominators for crypto. However, this doesn’t mean that all cryptocurrencies are created equal. In fact, there are several cryptocurrency types out there that can be separated into the following categories:
- Payment coins – digital forms of money that have no intrinsic value, are not backed by anything and can be used as a payment method or to facilitate peer-to-peer transactions (ex. Bitcoin, Litecoin, Monero).
- Utility tokens – assets that are created on top of another blockchain and provide users with access to a variety of services hosted by the platform (ex. Binance Coin (BNB) Basic Attention Token (BAT).
- Stablecoins – digital currencies whose value is linked to an external asset in order to ensure stability (ex. Tether (USDT), USD Coin).
- Meme coins – cryptocurrencies inspired by popular memes (ex. Dogecoin, Shiba Inu)
- Central Bank Digital Currencies (CBDC) – digital currencies issued by a country’s central bank.
We know that investing in cryptocurrencies has become quite a popular endeavor, but have you ever wondered who are the people investing in this new asset class? Well, statistics can provide the answers.
It is estimated that there are currently over 420 million crypto users worldwide, placing the global crypto ownership rate at around 4%. However, the number of people who have used a crypto exchange at some point amounts to one billion. NBC News reported that approximately 21% of Americans have owned digital currencies in 2022, and the vast majority of them are millennials.
As expected, income plays an imported part in the equation – 25% of crypto investors in the US have high incomes, making $100,000 or more annually. When it comes to gender differences, a study conducted by Morning Consult shows that 70% of cryptocurrency users are men, despite comprising only 48% of the general population.
Although the US boasts the highest crypto trading volume, the largest rate of crypto adoption seems to come from developing countries such as Ukraine, Kenya, India or Nigeria. This comes as no surprise given that these regions are plagued by inflation and have a high percentage of unbanked or underbanked residents. Given their decentralized nature and accessibility, digital currencies can provide a solution to the financial challenges that people in developing countries are currently facing.
The cryptocurrency industry is still in its infancy, but it’s developing fast and continues to gain more ground in the traditional financial system. So, as a future crypto investor, you need to keep up with the rapid pace of development in the field and educate yourself on crypto matters in order to increase your chances of success.