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