What Motivates Retail Cryptocurrency Investors?

“Contrary to the Bitcoin apostles I met at the conference all those years ago, contemporary owners of cryptocurrency seem to be more interested in its speculative properties than its potential as an alternate currency or stable store of value.”

The first time I heard about cryptocurrency, specifically Bitcoin, I was attending a 2014 conference for libertarians and free-marketers. I recall a young Austrian School enthusiast discussing with an economics professor the potential of Bitcoin to compete with the dollar, which he hoped would spur policymakers—and I am paraphrasing here—to stop debasing the currency or at least to provide an escape hatch for those wary. The two of them envisioned a world in which a customer could walk into a cafe and opt to pay with any number of private currencies the owner accepted.

This, as I would find out, is the shallow end of the pool when it comes to libertarian aspirations for cryptocurrency. In addition to a path to freedom from the machinations of central banks and a means of introducing competition to currency markets, many libertarians hoped cryptocurrencies would provide a means of evading laws they deemed unjust—no short list there. It is no coincidence that one of the first widely known Bitcoin schemes was the “Silk Road,” a darknet drug market, the alleged leader of which was sentenced to life without parole in November of 2014. Implicit in these ideas was the notion that Bitcoin and cryptocurrencies like it would function as both a means of exchange and a store of value.

In the intervening years, cryptocurrency has become much more mainstream. No longer solely the domain of pseudo-anarchists and libertarian ideologues, several cryptocurrencies have become household names as their values have exploded. Institutional investors hold some $70 billion of Bitcoin alone, of which seventeen percent of American adults now own at least one share.