The Demographics Of Bitcoin

First I wish to state that, in my opinion, the data required to make good analysis of the demographics in Bitcoin is probably currently unattainable. Instead, I will rely on anecdotal evidence to try to give a good estimation of where it’s been and where it could go.

Bitcoin does not have representative demographics of any other existing economy. In the beginning it was hackers and programmers, quickly followed by libertarians, substance abusers, and apparently anarchists. The influx of capital caused the price of Bitcoin to increase rapidly and noticeably, bringing in gamblers, traders, and risk-takers. Each step of the way, entrepreneurs have also joined to facilitate the growth and rake in large pieces of the pie.

I believe the current phase is where more-or-less “everyday consumers” are joining in proportion to merchants that are beginning to offer normal goods and services for bitcoin. This is causing another expansion of demand, and in the last couple of weeks the speculators have come back to give another push. More and more bitcoin is looking like a mature, fully-functioning economy (although certainly not there yet).

While this is all well and good, there are some growing pains coming (or here). I think the technological foundation for this growth is set, but as an economy it simply isn’t playing nice with itself. One of my major problems with the economy right now is also one of its virtues. That is, the community. The community falls roughly on the libertarian spectrum with outliers on both sides of it. The greatest irony is that the political fervor gets in the way of allowing the economy to grow through simple free-market principles. Many, not all, bitcoiners have such a vivid view of what the economy should look like that they reject other models.

I think that the key here is to encourage experimentation while holding fast to the fact that if you don’t like something, you quite simply need not participate.

For example, I recall a discussion in a bitcoin chatroom about paying taxes on BTC income. There were multiple participants that believed it would “destroy everything that bitcoin stands for” to pay them. I got hung up on the phrase “stands for.” Do not be confused; bitcoin is not a political tool to subvert the powers that be, but a (nifty) financial instrument.

Let’s take the politics and hyperbole out of bitcoin and allow it to become the economy it deserves.