Saison Capital: From No-coiner to Degen — Mapping the Journeys of the Crypto Curious and Implications for Builders
CMC Research

Saison Capital: From No-coiner to Degen — Mapping the Journeys of the Crypto Curious and Implications for Builders

1 year ago

In this column for CMC, Saison Capital analyzes users in different stages of crypto adoption, looking at how people enter crypto, and shares valuable insights for crypto builders.

Saison Capital: From No-coiner to Degen — Mapping the Journeys of the Crypto Curious and Implications for Builders

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By Qin En Looi (@webthreedad), Principal at @SaisonCapital

Building in web3 must be done with the journeys of the crypto curious in mind. While crypto has entered the mainstream conversation, penetration is still low - 20M monthly active users on Ethereum, one of the most popular blockchains, in comparison to 5B Internet users. Understanding how one goes from crypto curious to crypto convert is not just for watercooler talk, but carries important implications for crypto founders and builders in winning over the majority.
Last month, we wrote the first column for CoinMarketCap on the crypto landscape in Southeast Asia, detailing findings on adoption rates, barriers to overcome for mainstream adoption and more. As conversations unfolded surrounding the findings, another question arose - “what causes individuals to fall down the crypto rabbit hole?”

The journey, as we outlined in the first article, starts with The No-Coiner - someone who first becomes aware of crypto. As curiosity grows, perhaps just enough to start a crypto wallet, each individual eventually faces a crossroad - “Should I buy crypto?” If positive, the next question then follows - “What crypto should I begin with?”

Keen to find out the answers to this and implications for builders, we launched a second round of surveys targeted at 700+ individuals to understand 2 questions:

1. Who encouraged them to first purchase crypto?

2. What was their first crypto purchase?

This was what we learnt:

• More than half of respondents make their first crypto purchase for smaller-cap coins

• Stablecoins is the least popular path to entry - but this might change very soon

• Media and news outlets remain king when it comes to building confidence for the first crypto purchase

• Family and friends also play an important role to bring someone onboard crypto

• While work advocacy for crypto remains low, the crypto-native generation is already learning about crypto from workplace conversations

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What was your first crypto purchase?

More than half of respondents made their first crypto purchase for smaller-cap coins

While the strict definition of altcoins is any crypto that is not Bitcoin, we segregated Ethereum and stablecoins from the other altcoins to better understand consumer dynamics. From our survey, we learnt that more than 1 in 2 individuals start their crypto journey with these smaller-cap cryptocurrencies. Through follow-up conversations with some of these individuals, we learnt that buying motives are twofold - speculative investments, and a means to an end.

On speculative investments, the perception is that smaller-cap cryptocurrencies have larger volatility, hence potentially higher upside than large-cap cryptocurrencies like Bitcoin and Ethereum. Some even colloquially call Bitcoin “the crypto for boomers.”

In addition, smaller-cap crypto currencies were purchased as a means to an end - be it the purchase of a non-fungible token (NFT) or playing of a game.

“I bought AXS as my first crypto because I heard from some friends that they were playing Axie Infinity, and one of the requirements to play the game was to have some AXS tokens to pay for in-game activities like breeding” – College Student

Stablecoins is the least popular path to entry - but this might change very soon

Noticeably, stablecoins is the least popular path to entry. The most commonly-heard reason was the lack of utility. Stablecoins are most often used as a temporary store of value for active cryptocurrency traders, rather than a medium for transactions related to products and services. “I use stablecoins like USDC as a safe harbor when I think prices are going to drop. Once they drop, I use the USDC to buy back crypto,” says an architect who is an active user of several DeFi protocols.

Yet this is a trend that might reverse quickly, as the use of stablecoins for transactions is gradually increasing. Most recently, the Monetary Authority of Singapore announced the support of a purpose-bound digital Singapore Dollar, outlining use cases such as government payouts and skills development claims. Driven from a credible source with a top-down approach (i.e. citizens have to use digital SGD otherwise they will not be able to claim the benefits), it would not be surprising to see stablecoins be the de facto entry path to crypto in the near future.

Who encouraged you to make your first crypto purchase?

Having understood what people purchased as their first cryptocurrency, we were then curious on who led them down the rabbit hole.

Media and news outlets remain king when it comes to building confidence for the first crypto purchase

We learnt that media and news outlets still remain king in building confidence for one’s first crypto purchase, with 27% of the surveyed population attributing their first crypto purchase. As sources of authority and credibility for a large swathe of the population, media and news publications play an important role in weeding out misinformation and lending a more-objective voice in a noisy environment. As such, the reading, listening and watching of content from media publications becomes a key driver in influencing crypto interest, and eventually conversion. “I first bought Bitcoin when I heard about it on the news. After diving deeper, I understood more about what the blockchain is and how a distributed ledger prevents corruption of financial records,” says a secondary school teacher.

Family and friends also play an important role to bring someone onboard crypto

While the media remains influential, family and friends play a critical role in reinforcing the narratives and guiding an individual into crypto. With 25% of survey respondents attributing their first crypto purchase to the influence of family and 21% to their friends, the importance of advocacy among existing crypto users is underscored. This is best characterized by a pilot who shared, “I was a skeptic for many years even though I had friends around me who were buying crypto then. I had always thought it was just one big scam. However, in November 2021, I decided to reach out to a friend who conducts introductory classes for crypto. One year later, I'm deep in the rabbit hole learning more and more about what web3 has to offer, allowing me to broaden my horizons in both technology as well as finance.”

This is echoed by another individual who currently works as a data privacy lead, “I jumped into the crypto space back in 2013 after hearing it from a good friend in school. I was intrigued by the concept of mining for Bitcoin and has never stopped since.”

While work advocacy for crypto remains low, the crypto-native generation is already learning about crypto from workplace conversations

Noticeably, workplace conversations are the least influential in the crypto conversion journey based on our survey. However, a bifurcation starts to emerge between the crypto-native generation (those born from 2000 onwards and recently entered the workforce), compared to crypto-immigrants (those born before 2000).

9% of crypto immigrants attribute their first crypto purchase to workplace interactions, compared to 17% of crypto natives. This could potentially indicate a growing interest in crypto among colleagues, or even the discussion of crypto entering the “work” fold as an increasing number of companies consider the implications of web3, crypto and other distributed ledger technologies. A software engineer who falls in the crypto-native category said, “I got into crypto when it was still viable to mine Ethereum, over an off-topic discussion in my software engineering team. My colleagues and I wanted to assess the feasibility of setting up mining rigs with off-the-shelf hardware and available software.”

Implications for builders - Authority, Social Proof, Scarcity

These findings carry important implications for crypto founders and builders who are looking to onboard more non-crypto owners into the fold, and can be summarized into 3 principles:

1. Authority - Ask any web3 founder how they think about distribution and “social media” would likely be the top-of-mind answer. Yet as our survey has shown, while social media has a role to play (often in shaping public perception), the leap from “crypto curious” to “crypto convert” often relies on authoritative, trusted sources like the media and news outlets. Founders should not neglect the importance of building authority and credibility of themselves and their companies, including to the media and news. Research has shown that establishing credibility and authority prior to attempting to influence has led to increased efficacy - in a medical setting, patient compliance to advice from their doctors and therapists increased 34% when the professionals posted their degrees, awards and certifications on the wall.
2. Social Proof - In all cliches lie a grain of truth, including the cliche “monkey see, monkey do”. The role family, relatives and friends play in influencing individuals to purchase crypto is undisputed - combined, they account for almost half of the surveyed population. Founders can think of ways to engineer “safety in numbers” - a concept that has been proven since the 1980s, when researchers solicited more door-to-door donations after showing residents a list of other residents from the neighborhood who had already donated. What is key is to find the right set of ‘influencers’ whom the individual trusts and has existing association with.
3. Scarcity - "Whatever is rare, uncommon or dwindling in availability confers value on objects, or even relationships," says Robert Cialdini, the father of modern day persuasion research. While the concept is no stranger to the crypto scene (exclusive airdrops, low-supply NFT collections and time-limited challenges), scarcity has to be a combination of rare and valuable. While rarity can be engineered through a multitude of techniques, the value first needs to be established, otherwise it will not be desirable. A pencil I have on my table might be one-of-its-kind in the world, but if its value is not understood and recognized, it remains to be invaluable

To conclude, the path consumers take towards adopting crypto carries interesting insights on their motivations and behavior (e.g. smaller cap crypto currencies for speculation or as a means to an end), as well as sources of influence. Through an understanding of these, founders can thoughtfully establish authority, engineer social proof and engender scarcity as they bring crypto to the majority.

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