Bank of Canada staff discussion papers are completed staff research studies on a wide variety of subjects relevant to central bank policy, produced independently from the Bank’s Governing Council. This research may support or challenge prevailing policy orthodoxy. Therefore, the views expressed in this paper are solely those of the authors and may differ from official Bank of Canada views. No responsibility for them should be attributed to the Bank.
Abstract
Since 2016, the Bank of Canada has conducted annual surveys to monitor awareness, adoption and usage of Bitcoin and other cryptocurrencies (Henry et al. 2018, 2019a, 2019b). This report incorporates results from the 2019 Bitcoin Omnibus Survey and the November 2020 Cash Alternative Survey. We find that between 2018 and 2020, the level of Bitcoin awareness and ownership among Canadians remained stable: nearly 90% of the population were aware of Bitcoin, while only 5% owned it. We find that about half of Bitcoin owners stated they usually obtained their bitcoins through mobile or web exchanges, while one-fifth used mining. Bitcoin owners were susceptible to certain risks, as evidenced by the fact that about half of current and past owners stated they had been affected by events such as price crashes, losing access to funds, scams or data breaches. The most commonly cited reasons for owning Bitcoin were related to its use for investment or based on interest in the technology. Bitcoin owners displayed greater knowledge about the Bitcoin network than non-owners, yet they scored lower on questions testing financial literacy.
Canadians' awareness of Bitcoin
We measure the level of Bitcoin awareness among Canadians4 using the survey question, “Have you heard about Bitcoin?” Awareness has increased since 2016. In that year, 62% of Canadians said they heard about Bitcoin. This was followed by a jump to 83% in 2017 and 89% in 2018 (Table 1). In 2019 and 2020, the levels of awareness remained virtually unchanged, at 87% and 88%, respectively. Overall, the level of awareness increased across all demographics over the 2016–20 period. At the same time, we observe persistent patterns in demographics. Specifically, we see the highest levels of awareness (above 90%) among Canadians who were male, had a university degree, were not employed (unemployed or not in labour force), were financially literate and had relatively high household income ($70,000 and above). From a geographic perspective, residents of Quebec were least likely to have heard of Bitcoin.
Canadians’ ownership of Bitcoin
Table 3 presents Bitcoin ownership in Canada between 2016 and 2020, overall and across demographic groups. The average share of Canadians who own Bitcoin increased from 3% in 2016 to around 5% since 2018. Ownership remained stable between 2018 and November 2020, despite the impacts of the COVID-19 pandemic. Differences in Bitcoin ownership across demographic groups tell a compelling story. Overall, we observe that most demographics followed the same patterns across years. In particular, Canadians who were young, male, employed, and had a university degree, high household
income and relatively low financial literacy were more likely to own Bitcoin.
The gender gap in Bitcoin ownership was highest in 2018 and 2019. In every year except for 2018, about 2% of women reported owning Bitcoin, while among men, ownership nearly doubled from 4.4% in 2016 to 8.3% in 2020.5 Another pattern that stands out concerns financial literacy. Individuals who scored lower on the three financial literacy questions showed higher rates of ownership (above 7% for low literacy compared with 4% to 5% for high literacy).
These results reveal interesting facts, specifically that Canadians who are financially literate are more likely to be aware of Bitcoin but less likely to own it. Fujiki (2020) provides a more detailed look at financial literacy: in contrast to our findings, Japanese cryptocurrency owners score higher on financial literacy questions and have more financial education at school compared with non-owners. But they are less financially literate with respect to other indicators related to money management, financial troubles and credit card use.
Table 4 presents the results of the marginal effects of demographic characteristics and financial literacy on Canadian’s Bitcoin ownership for the years 2018–20 and for the pooled data, using a logistic regression. For a better visualization, Chart 4 shows the graphical representation of these results.
Overall, marginal effects are consistent with descriptive findings already discussed. We find that the probability of Bitcoin ownership decreases with being female, older and unemployed, but increases with education. Furthermore, Bitcoin ownership is higher among those with low financial literacy, as coefficient estimates for medium and high financial literacy are statistically significant relative to the benchmark (low financial literacy score).
Crypto alternatives to Bitcoin
In addition to owning Bitcoin, some Canadians own “altcoins” (a colloquial name for other cryptocurrencies). Table 9 presents ownership of altcoins by Canadians in 2018 and 2019. According to the 2018 and 2019 BTCOS, altcoin ownership was very low in Canada, at about 3% for Ethereum and BTC Cash, 2% for Litecoin and below 1% for other cryptocurrencies. The growth rate is also very small—only Ethereum registered an increase, from 1.9% in 2018 to 3.4% in 2019. In addition, about half of altcoin owners were also Bitcoin owners.
Stablecoins are a type of cryptocurrency whose price is pegged to another currency or commodity, with the goal of providing price stability. We find that awareness of stablecoins is still very uncommon. For instance, only 5% of Canadians who had heard of Bitcoin had also heard of stablecoins. Table 9 suggests that ownership of stablecoins is even lower: just a fraction of a percent stated they owned the stablecoins Tether, USD Coin and Dai.
Conclusions
Using survey data, we study the awareness and ownership of Bitcoin in Canada between 2016 and 2020. We find that since 2018, Canadians’ awareness and ownership of Bitcoin have been stable: nearly 90% of Canadians stated they had heard of Bitcoin and around 5% owned it. While the demographic composition of ownership has shifted over time, Bitcoin owners are consistently more likely to be young, male, and have higher education. Ownership of other cryptocurrencies remained low, with ownership of stablecoins particularly rare. Even among those who had heard of Bitcoin, only 5% had also heard of stablecoins. The main reason for owning Bitcoin in 2019, as reported by Canadians, remained investment, followed closely by reasons related to technology. The share of Canadians in 2019 who owned Bitcoin because of payments fell, and Canadians were less likely than in 2018 to say they had used Bitcoin in the past year for purchases or person-to-person transfers. In contrast, non-owners stated that their main reasons for not owning Bitcoin included a lack of knowledge about the technology, a lack of trust in private digital currencies and the fact that their existing methods of payment meet their current needs.
Cryptocurrency users can be susceptible to financial and security risks. About 18% of past and current Bitcoin owners stated they had lost money as a result of a price crash. Furthermore, 14% of Canadians stated they had lost access to their personal wallets and 12% had participated in an initial coin offering that ended up being a scam. The interaction between financial literacy and participation in the market for cryptoassets is an important area to explore. While Bitcoin owners are more knowledgeable than non-owners about Bitcoin technology, they also perform worse on tests of financial literacy, despite having higher education levels.
The full report with charts can be found at this PDF link: https://www.bankofcanada.ca/wp-content/uploads/2022/04/sdp2022-10.pdf
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